The Euro has been on a roller coaster since the beginning of the month, but remain range bound between 1.05 and 1.06 against the US Dollar. It has made significant gains against the Pound, but like most other currencies sentiment around Sterling has grown increasingly sour as the March deadline for Article 50 looms.

So what can we expect from today’s interest rate decision from the ECB, and what signals are markets looking for?

Future monetary policy changes

Markets do not expect the ECB to raise rates or make changes to the current QE programme, but any hints to policy changes in the near term may provide support for Euro exchange rates.

Draghi faces heat today, whilst maintaining a dovish outlook on the Eurozone economy target inflation for the bloc came in much closer to the bank’s target of 2%.

Mr Draghi will argue that core inflation, which excludes energy and food prices, remains weak at 0.9%.

The Euro has already made significant headway against the Pound since the beginning of the trading session, with GBP/EUR dipping below 1.15 for the first time in nearly two months.

Euro sentiment still remains weak

Euro exchange rates may spike today, but the general consensus is that the Euro still has many obstacles to climb for the remainder of 2017, and although economic indicators point to an improved economy, political tensions in Europe are likely to drive the currency lower.

Next week’s Dutch elections have already caused quite a stir, and the prospect of a far-right political party taking power is already setting the mood for the French elections.

Despite polls after poll pointing to a Macron victory in France, investors remain cautious towards Le Pen given the shock victories of Brexit and Trump last year. A Le Pen victory is a dangerous concept for Euro investors, given her agenda to take France with Britain away from the Euro.

The Euro could be set for further gains this week, but I expect any long term momentum to be halted by the political landscape which remains a concern.