Ahead of the ECB later today, the risk-on sentiment is retreating this week albeit in a corrective manner. Thus, the return to risk-on might happen before the end of the week. 

S&P 500 is down by 40 points but currently rejecting further push below 4500. In the bond market, the US 10-Yr is retreating today thus giving the Gold bulls some hope for an 1800 retest while discouraging the Dollar bulls from pushing toward 94. The greenback might then dip for a retest of the 92.5 key psychological support. For the individual currencies, the expectation is still high for a EUR and GBP bullish breakout across the board ahead of the ECB in the coming hours. Meanwhile, CHF and JPY might still decline a bit today despite the current bullish run, especially if the risk-on regains control of the market sentiment.

ECB Preview

The ECB will steal the spotlight today. There is a large expectation that the European top bank will discuss the tapering possibility. Tapering talks with a hawkish tone will send the EUR to the sky. However, the most likely scenario is a taper with a rather cautious tone which could also lift the EUR but at a less pace. On the other hand, a taper delay will pressure the EUR further. Delay with a dovish outlook is the least likely – that would be devastating for the European currency.

Video outlook

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