For the second week in a row, the EUR/USD pair has been trading in a fairly narrow range, limited by the levels of 1.1190 and 1.1285. The markets continue to lead expectations of a quick decline in interest rates of the Fed and the ECB.

"The moment of truth is not far off, as soon the leading central banks of the world will have to reveal intentions on their monetary policy," JPMorgan Chase experts noted.

This week, July 25, the ECB will hold a regular meeting at which, as expected, the regulator will lay the foundation for future monetary easing.

"Mario Draghi effectively began his term of office as president of the ECB, lowering the rate at the first meeting. On Thursday, he can prepare the ground for a no less spectacular care and give a signal of a softening of the monetary rate in September," Bloomberg Economics predicts.

While some analysts believe that the European Central Bank may announce a reduction in the key rate at the next meeting, others believe that the rate will remain unchanged until the end of September, that is, zero.

It is assumed that in the first case, the EUR/USD pair may sharply go down, and in the second case, there should not be strong fluctuations in quotations.

As for the Fed, there is no doubt that the regulator intends to soften its policy and, most likely, will do so already in July. However, the question still remains: how much will the US central bank cut the rate by 25 or 50 basis points?

According to the head of the Federal Reserve Bank of St. Louis, James Bullard, a decrease of only 25 basis points would be appropriate.

"The greenback can significantly weaken if the Fed gives grounds to believe that it is open not only for insurance (one-off) rate cuts," said Hans Redecker, strategist at Morgan Stanley.

BNP Paribas analysts, in turn, draws attention to the fact that the Fed's ability to mitigate policy in response to weak inflation, slowing economic growth and external risks are much more significant than those of the ECB, and the effect of lowering rates in the US, given the role of the dollar in the world, will be more palpable.

"In the near future, the single European currency may be under pressure, but we do not expect serious losses from it," said the financial institution representatives.

According to the BNP Paribas forecast, in the third quarter the EUR/USD pair will rise to the level of 1.18 and to 1.19 in the fourth.

Of the events that may have an impact on the formation of short-term trends, it is worth mentioning the publication of July releases on business activity in the eurozone and the US (July 24) and the release of data on US GDP in the United States for the second quarter (July 26).