ECB Up Next
Following the September BOC meeting yesterday, focus today shifts to the ECB. The central bank is widely expected to hike rates by .75%, surpassing the .5% hike in July. With inflation in the eurozone having hit record highs of 9.1% in July, the pressure is on the ECB to act decisively. Given the aggressive tightening we’ve seen elsewhere, should the ECB hike by less than .75%, the reaction in EUR is likely to be firmly bearish.
Along with the rate decision itself, traders will also be paying close attention to the latest set of updates and forecasts from the bank. In particular, the latest inflation forecasts will be closely watched. Any upward revisions here will no doubt cement hawkish ECB expectations in the coming months, keeping EUR supported. Traders will be also be keen to see how the bank addresses recent FX weakness. Any mention of the bank monitoring the situation will likely be taken as a hawkish signal also. However, there are risks around the bank’s economic outlook given the growth concerns mounting on the horizon. If the ECB sounds overly concerns this will no doubt dampen any upside reaction in EUR today.
Where to Trade The ECB Today?
EURJPY
The pair has been moving sharply higher following the breakout above the corrective bear-channel/bull flag. With both MACD and RSI bullish here and with the retail market heavily short, there is plenty of room for the current rally to continue. Price is currently testing the YTD highs at 144.01. Bulls can look for a break of this level to target 149.83 longer-term.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.