Euro is quite flat today and the ECB hawks are spooked by the recent rising inflation numbers but the doves are firmly in control right now and so the policy is likely to remain loose for the time being. There were almost too many hawks on the newswires to name but among them were ECB Vice-President Luis de Guingos, Bundesbank President Jens Weidmann and fellow Council members Robert Holzmann and Klaas Knot. They are all worried by a rebound in the Eurozone economy coupled with a sharp rise in inflation to 3%, well above the ECB’s target. The euro has loosed its level but somewhat supported by the expectations of European Central Bank, which meets Thursday, close to tapering its own stimulus programme.

Nevertheless, the retention of a majority in the doves Council, led by President Christine Lagarde, is almost certain, emphasizing that the excessive impact of the inflation target is temporary and there are no signs of further tightening of policy in the future. She can observe a surprising big drop in the Eurozone services PMI final August reading and the unexpected drop in German retail sales year/year in July, sending data last week. This could lead the euro pair into bearish move.

Lagarde likely to explain her thoughts at the press conference following the ECB’s announcement on Thursday but there is also something else that traders need to look out for: the ECB’s economic projections. However, some members of the central bank, including governing council member Francois Villerroy, are skeptical that the bank should consider the most favorable financial conditions in the euro zone in determining the pace of the PEPP this week. Villeroy is considered one of the Uber-doves, so his comments are significant. This refers to the sluggishness in the property purchase.

However, “in the monthly volumes, we see favorable financial conditions and we must underline that they are more favorable than our June meeting,” Villeroy stressed. We need to determine the monthly volumes for the fourth quarter. This means that when discussions take place, an action from the ECB should not come to certain meetings later, where the euro will be exposed for a long time. “We do not think a consensus will be reached until the December 16 meeting,” analysts at Brown Brothers Harriman argued.

On the other hand U.S. nonfarm payrolls rose just 235,000 in August, compared to the average estimate of 728,000 economists in a Reuter’s poll, and the resurgence of the Covid-19 stopped hiring as demand in restaurants and hotels increased. Redemption is a condition for separating its pandemic-era asset purchases. Job growth slowed more than expected in August amid a softening in demand for services and persistent worker shortages as COVID-19 infections soared.

Despite of hopes from the European Central Bank’s (ECB) meeting and the increasing COVID-19 tragedies do not hesitate to recall bears.

EUR/USD 4 Hour Chart:

Support: 1.1859 (S1), 1.1841 (S2), 1.1815 (S3).

Resistance: 1.1902 (R1), 1.1927 (R2), 1.1945 (R3).

Amidst this above catalysts euro pair is on downtrend now. We expect a bearish trend for EUR/USD.