EUR/USD: The pair should decline within next 7 days, but risk of rise remains (BTMU bank)

In a note published today, BTMU updates us on the EUR/USD after the ECB's meeting:

"The euro remains stable against the dollar in the short term, but the more dovish than expected comments by the head of the ECB yesterday should weigh on the euro during the next 7 days.

Draghi clearly highlighted the fact that downside risks have increased in the ECB's forecasts. A clear message was also sent about the possibility of new actions at the next meeting in March, when the ECB's newest forecasts will be published.

Another key factor regarding the direction of the euro within the next 7 days will involve the feeling of overall risk. If risk appetite remains fragile, it could support the euro and justify a neutral view on the EUR/USD.

However, if shares stabilise or rebound, short-term downside risks increase for the EUR/USD.

We are also worried that the Fed may publish a statement more dovish than the last one at its meeting next week, which could modestly weigh down on the dollar.

Overall, we are neutral on the EUR/USD in the short term, anticipating a horizontal range from 1.06 to 1.1050 over the next 7 days."