Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View More
EUR-crosses Highly Vulnerable with ECB Meeting in Two Days

EUR-crosses Highly Vulnerable with ECB Meeting in Two Days

Christopher Vecchio, CFA,

Talking Points:

- Euro, Yen gains as long-end sovereign yields slide lower.

- Remains important to look at the big picture for US Dollar.

- As FX market volatility stays elevated, it's a good time to review risk management principles.

While this week isn't so heavy on the data side for the US Dollar, it is an important week for several of the other major currencies, in particular, the Canadian Dollar, the Euro, and the New Zealand Dollar. The situations their three central banks are facing couldn't be more different.

For the Canadian Dollar, the Bank of Canada has recently adopted a neutral tone thanks in part to the election of Justin Trudeau as prime minister. As covered immediately after the election in October, and then again after the BOC meeting in January, we believe that the prospect of fiscal stimulus is enough to keep the BOC at bay. This shift in policy rhetoric has produced a major turning point for the Canadian Dollar.

For the Euro, the European Central Bank is far from neutral: it needs to be decisively dovish if it wants to make an impact. Rates markets are already pricing in another 10-bps rate cut this Thursday, and without unloading their 'big bazooka,' it's very possible that the ECB is simple rewinding the clock and putting the first week of December 2015 on replay.

For the New Zealand Dollar, the Reserve Bank of New Zealand doesn't enjoy the clarify that either the BOC (neutral) or the ECB (dovish) enjoys. On one hand, inflation expectations are slumping as the globe shifts further into negative rate territory, putting pressure on long-end New Zealand government bond yields. While the RBNZ doesn't want to see these expectations fall too dramatically, it is balancing this view against elevated activity elsewhere, particularly in the housing market. Much like in December, the RBNZ is in a quandry with how to present it's case to market participants.

See the above video for technical considerations in EUR/USD, AUD/USD, NZD/USD, EUR/JPY, EUR/GBP, and the USDOLLAR Index.

Read more: Mind the Forest, Not the Trees, for the US Dollar This Week

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.