The euro is expected to strengthen further on Thursday if the ECB gives up the so-called "easing bias" — where the central bank favors a more accommodative policy.
Until now, the ECB has stated that it stands ready to increase the level of bond purchases it makes in both duration and/or size in case the economic outlook deteriorates in the euro zone. Dropping such a statement — the easing bias — would indicate that the ECB believes that prices in the euro zone are increasingly more aligned with its "close to but below 2 percent target." Markets would perceive this as a slight move towards policy normalization, which traditionally pushes the currency higher.
"A removal of the easing bias at this meeting is likely to strengthen the euro," Kjersti Haugland, chief economist at DNB Bank, said in a note Monday.
"The guidance was kept unchanged at the meeting in January, but the accounts from the January meeting confirmed that the Governing Council still expects to revisit the guidance 'early this year'," Haugland said.
Minutes from the last monetary policy meeting in January showed that the bank could announce changes to monetary policy in "early" 2018, but it thought that it would be too premature to change its monetary policy stance at the start of the year.
Almost a third of 56 economists surveyed by Reuters said they expect a removal of the easing bias on Thursday. The same survey, released Friday, showed that the majority of economists questioned said the change will only come in June.