On Friday (Oct 28), / low pushed higher, temporarily traded at 0.9991, up 0.29%.
To reach neutral level, Euroshrink table in sight.
With inflation running high in Europe, the European Central Bank could send an important signal on reducing its balance sheet tonight.
The ECB will also release information on the reduction of its balance sheet (QT).
But in the current environment, any quantitative tightening has to be done very carefully.
Citi and HSBC believe that the ECB may adjust its APP reinvestment guidance in October, hinting at the possibility of a QT future.
But a final decision is likely to be left until the December meeting.
The ECB is likely to announce changes to its rules on targeted long-term refinancing operations.
This would prevent European commercial banks from using the scheme to earn interest margins, putting to rest the current political controversy caused by the TLTROs.
Eur/USD over a wider time horizon, it looks like this pair could lose some ground and bounce back.
However, if buyers do not defend the 0.9900/20 price zone, the bears may regain control of this pair.
