Despite the recent remarks by many of the Federal Reserve members last week, the US Dollar failed once again to sustain any gains across the board. This is also despite the fact that the Federal Reserve is planning to sell some of its assets later this year.

Most of the members including the Federal Reserve Chair Janet Yellen are still looking for at least one more rate hike before the end of the year, while things are getting interesting in Europe.

ECB Not Sure Yet

The European Central Bank is not sure about its next step. In the past few weeks, the ECB members have been sending out confusing remarks about their next possible move.

We all know that the ECB is already tapering its Quantitative Easing program and it had already been cut by 20B Euros a few months ago. However, it looks like the ECB might not be able to end the current QE this year, since there are only a few meetings left, while it is still buying 60B euros worth of assets a month.

However, traders need to keep an eye on inflation data, which remains near the ECB target, which might lead the ECB to think of something different.

One of the most important scenarios that the ECB might surprise the market with is the Deposit Rate. In the meantime, the deposit rate is around -0.4%.

There is no reason or the ECB to raise the minimum bid rate while the deposit rate is still below 0%. Therefore, cutting the asset purchases in addition to a deposit rate hike has become a higher possibility.

Such move would change the market upside down whether in the Euro or the European equities.

EURUSD At The Highest Level in 16 Months

The Euro continues to rise further posting the highest level since April of last year, nearing 1.15, which should be watched very closely.

The area between 1.15 and 1.16 is very significant for the Euro, the pair failed to break above that area since the beginning of 2015 until today.

However, this time, there is a fundamental catalyst which might push the pair higher in the coming weeks, which is the ECB policy, side by side with the encouraging economic releases across Europe.