COMMENT-EUR/USD dips ahead of ECB may be opportunities for bulls

EUR/USD struck a 4-session low Monday but held above key short-term support near 1.1010/30 and some investors may see recent dips for the pair as buying opportunities despite the risk of an ECB rate cut.

The ECB rate decision is due Thursday, with a 25bps cut widely expected, so the new projections and President Lagarde's press conference will be key.

Germany, which is typically an engine of growth for the euro zone economy saw its Q2 GDP shrink 0.1%, which may lead the ECB to lower growth projections.

The central bank's primary objective is maintaining price stability, however, and inflation may still be an issue. Investors will wait to see if policymakers show more concern for inflation or growth.

Should the central bank indicate inflation remains a top concern the probability the probability for future ECB rate cuts may dwindle.

That scenario could keep the trend of tightening German-U.S. yield spreads (US2DE2=RR) in place.

Narrowing of rate differentials between the Fed (SRAU26) and ECB (FEIH6) at the end of their cutting cycles may persist as well.

Spread and rate differential influences may fuel a EUR/USD rally above the August monthly high.

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