• The European Central Bank is expected to maintain its monetary policy unchanged. 
• ECB President Christine Lagarde hinted at summer as the time to pivot.
• EUR/USD should gain bearish traction once below the 1.0845 support area. 

The European Central Bank (ECB) will have its first monetary policy meeting of the year on Thursday, but little is to be expected from European policymakers. The Main Refinancing Operations Rate will likely be maintained unchanged at 4.50%, and the Deposit Facility Rate at 4%. If something is, the central bank will continue “tightening” through the reduction of reinvestments in the Pandemic Emergency Purchase Programme (PEPP).

Indeed, the ECB is pivoting and rate cuts are on the table for 2024. Still, central bankers need further evidence underlying inflation is under control before taking such a bold step. 

Back in December, the Governing Council decided to keep the three key ECB interest rates unchanged, acknowledging  inflation  dropped in the previous months while estimating price pressures are likely to “pick up again temporarily in the near term