Market Awaiting ECV Interest Rate Decision

Yesterday”s Trading:

The euro/dollar closed slightly down on Wednesday. The euro restored from a 1.0945 minimum to 1.1034 on the American session. The buyers managed to win back their day”s losses but couldn”t hold on to their positions above 1.10.

The Reserve Bank of New Zealand (RBNZ) and Canada didn”t have much effect on the euro with their interest rate decisions. However, the risks of a fall for the euro against the New Zealand dollar increased significantly, thereby making the euro fall 156 points against the USD after the RBNZ made their announcement. The Kiwi could provoke a weakening of the euro during European trades.

The RNBZ unexpectedly dropped its rate by 0.25% to 2.25%. The regulator announced that it did so due to the slowing of European and Chinese growth, in addition to that of emerging markets.

The Bank of Canada kept its rate unchanged at 0.5%.

Market Expectations:

A corridor of 120 points has formed over the 3 days before today”s ECB meeting. EUR/USD is trading around 1.0973. The price is at the lower limit of the corridor.

The market is waiting for the ECB to make an announcement regarding interest rates. Market participants expect interest on deposits to be dropped by 0.1% to -0.4%. Together with this, the ECB could increase asset purchasing from 60 to 75 billion euro per month.

If the ECB undertakes such measures then we can expect the euro/dollar to fall to 1.0880. Since the market has already taken these measures into account, the fall will last a few moments and then shoot back up. It”s unclear what Draghi will say at the press conference, but I reckon what he has to say will be more important than the decisions themselves.

Day”s News (EET):

14:45, ECB decision.

15:30, Draghi press conference.

15:30, Canadian January new housing price index, US initial unemployment benefit applications.

Technical Analysis:

After the fall of the NZD/USD, the euro/dollar fell to 1.0973. The price is near the LB meaning that the market on the hourly is balanced.

No sharp fluctuations are expected before the ECB”s decision comes out. In my forecast I”ve marked out the approximate amplitude of the fluctuations after the decision and Draghi”s speech. Forecasts in different directions are not recommendations to trade. This is how I reckon the market will react; what you think is up to you. I”m against trading during fundamental events due to high volatility and price slippage.

The technical picture on the daily is contradictory. The oscillator stochastic has formed a euro sell signal. Wednesday”s candle is indicating a strengthening of the euro to 1.11. Draghi should allow the situation and set the path of the euro for the month ahead.

Source:: Market Awaiting ECV Interest Rate Decision

Won't your trader friends like this?
Alpari
About the Author
Alpari was founded in 1998 and is one of the world’s leading Forex brokers, offering clients a full package of the most modern financial instruments and technological solutions for online trading and investment. According to data from Finance Magnates, Alpari has been one of the largest Forex brokers in the world for a number of years. The trading turnover of the Alpari companies in 2014 was 2.5 trillion USD. Today Alpari is the world’s largest MetaTrader 4 Forex broker. The first half of 2015 saw company branches offering their services to over one million clients from over 150 countries in the world. Alpari clients have access to over 50 currency pairs and an extensive range of other instruments. The company offers the use of three trading platforms for computer and mobile applications for use with iOS and Android. Alpari is a member of international organizations such as The Financial Commission (Hong Kong) and CRFIN (Russia). Bonuses: the Alpari Bonus Program was launched in 2014 and allows clients to independently change their conditions for working on the financial market: reduce commission, save money on swaps, improve conversion rates and much more. Read More about Alpari HERE or you can visit their website direct by CLICKING HERE..

Related Posts

Leave a Reply

*