The ECB left the main refi rate unchanged at 0.25% in March. Interest rates on the marginal lending facility and the deposit facility also stayed unchanged at 0.75% and 0.00% respectively. While the Quarterly Macroeconomic Projections forecast only show very gradual economic recovery and below-target inflation by 2016 (1.5%), it does not seem that the central bank would add more easing measures in the near-term, unless faced with big risks. The ECB at this meeting also maintained its forward guidance that interest rates are expected to remain at present or lower levels for an extended period of time, unchanged from the February one. The euro climbed higher on the inaction.
Weekly bias remains on the upside and demand for the pair would continue if price breaks 1.3914 resistance, further rise to 1.4000 psychological zones is expected. However with a Pin bar formation on the daily charts, supply should kick off first in the early days of the weeks trading session as price is giving a rejection pattern around 1.3893 resistance (December 27, 2013 high).
A key economic indicator to watch out for in the coming week is the U.S Retail Sales scheduled on March 13, 2014. This would give an insight to the recently released Non-Farm pay Rolls if the U.S economy is truly improving which might see FEDS trimming its current bond buying program.