The ECB rate decision and Lagarde’s press conference are key events of the day. Rate announcement will come at 12:45 pm BST while the press conference will begin 45 minutes later, at 1:30 pm BST. While a change in the level of interest rates is unlikely, a strong and clear guidance may be offered. The ECB will release a new set of economic forecasts today and may announce the end of the QE programme, what would pave the way for a rate hike as soon as next month. This look like almost a done deal but what is uncertain is the scale of a hike. Current market pricing points to a 36 bp of tightening at the July 21 meeting, followed by 38 bps of tightening in September. These are massively hawkish expectations for a traditionally very dovish central bank. While it is unlikely that Lagarde will say clearly how much the ECB will hike rates in July, investors will look for hints.
Taking a look at the EURNZD chart, we can see that it tested the upper limit of a recent trading range at 1.6650 earlier this week but failed to break above. A strong hawkish signal sent by ECB today may help resume the upward move. In case of a break above the 1.6650 price zone, the next resistance to watch can be found at 1.6770.