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.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • Tune in to @IlyaSpivak 's #webinar at 10:00 PM ET/3:00 AM GMT for insight on the cross market weekly outlook. Register here: https://t.co/E213bTtq5C https://t.co/1hiYTne4JK
  • The $SGD is driven by the Monetary Authority of Singapore, which manages exchange rate instead of short-term interest rates. Learn more on the SGD and how to trade it.Get your market update from @ddubrovskyFX here:https://t.co/eWLM9XZs5Y https://t.co/NsEpx2pSqD
  • China home prices m/m for November: Actual: 0.3% Prior: 0.5%
  • #USDCHF pivot points (daily) – S3: 0.9722, S2: 0.9779, S1: 0.981, R1: 0.9867, R2: 0.9894, R3: 0.9951- https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • IMF to Australia: - Renewed overheating in the housing market poses a risk - #RBA and the government should keep macro policies accommodative (BBG)
  • #GBP, #SEK and the #NOK are expected to be the most active G10 currencies vs USD with 1-week implied volatility at 9.35, 9.13 and 8.90, respectively
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am ET on DailyFX! https://t.co/RgnsklZ2Gl
  • The Australian and New Zealand Dollars trimmed their gains as optimism on the US-China “phase one” trade deal faded. NZD/USD is at risk to turning lower on signs of technical indecision $AUDUSD $NZDUSD #tradewars - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2019/12/16/Australian-Dollar-and-New-Zealand-Dollar-Outlook-as-Week-Begins.html?CHID=9&QPID=917702 https://t.co/SmVBWwojc3
  • - The Singapore Dollar (SGD) presents a unique undertaking for traders - It is guided by the MAS, which manages the exchange rate instead of short-term rates - Learn the principals of developing an SGD fundamental forecast to trade USD/SGD https://www.dailyfx.com/forex/fundamental/article/special_report/2019/09/03/The-Singapore-Dollar-and-MAS-What-is-SGD-and-How-to-Trade-it.html
  • #DidYouKnow a #Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/c51s3IBcEu https://t.co/eWM70sTfq3
Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

2017-03-08 14:30:00
James Stanley, Currency Strategist
Share:

Talking Points:

- Tomorrow brings the European Central Bank’s March rate decision to global markets.

- The expectation is for no movement on rates but as has become usual for these events, the drivers will likely emanate from the details of the press conference. Below, we look at three Euro markets of interest as we move-closer to this rate decision.

- If you’re looking for trading ideas, check out our Trading Guides. And if you’re looking for ideas that are more short-term in nature, please check out our Speculative Sentiment Index (SSI) Indicator.

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Tomorrow brings the European Central Bank’s March rate decision to markets. No movement on rates is expected, and as has become usual for ECB meetings of recent, the primary drivers will likely emanate from the details and the verbiage offered by Mr. Mario Draghi during the accompanying press conference.

The big question is the prospect of QE-taper. Recent European economic data has been encouraging of late, with Euro-Zone GDP growth currently tracking at an annualized 1.7%, and inflation in the month of February printing above the bank’s 2% target. With the ECB’s QE program set to scale-down at the end of March, the bank will be buying €60 Billion worth of bonds each month until the end of this year. Investors have already begun to look around the corner in the effort of seeing what the ECB may do next: Whether they’ll let the program run its course at which point the ECB will no longer be feeding liquidity to markets, or whether the bank will look for some type of alternate program or replacement strategy (similar to the Federal Reserve enacting ‘Operation Twist’).

Likely – Mario Draghi will try to straddle the line tomorrow without eliciting too much volatility on either side of the discussion. The prospect of a ‘taper tantrum’ could drive strength into the Euro, obviating some of the recent benefits of the bank’s outsized QE-program, and this could further complicate the Euro-Zone economy’s almost decade-long struggle with lagging growth. Also given the fact that Dutch elections take place next week (March 15 – Fed day), French elections are taking place in April and then German elections in August – and this may not be the best time to rock the boat by introducing new strategies or ideas.

Nonetheless, fully expect market participants to grab on to any potential comment that may allude to what the ECB is looking to do next. Markets getting even an inch of innuendo about a potential taper could drive that into a mile’s worth of volatility. For all of their efforts, European QE did little to actually weaken the Euro, as much of the move came-in before the ECB program had actually begun to buy bonds.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

On the chart below, we dial-in to look at more near-term price action in EUR/USD. In December, the pair caught one-two punch from the ECB (another round of QE) and the Federal Reserve (rate hike); and all that showed-up was a ~150 pip break of that prior support zone with a new-low showing at 1.0340. After that, buyers returned, bringing Euro price action back into the bear-flag in January before prices settled-back to that key level around 1.0500.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

EUR/JPY

For those looking to substantiate bullish Euro positions, flying in the face of an aggressive U.S. Dollar up-trend could present its own challenges. For bullish Euro approaches, EUR/JPY may be more attractive under the assumption that the BoJ will likely be ‘less-hawkish’ in the future than what we’ve seen out of the Federal Reserve. On the chart below, we start with a ‘big picture’ look at the most recent pressing-themes in EUR/JPY and below that, we dial-in to a shorter-term version.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

On the daily chart below, we can see how this key level of resistance at 123.10 gave multiple iterations of resistance over a two-month period. Eventually, bulls relented and bears took over. But this was a short-term move, as buyers showed back-up at the 50% Fibonacci retracement of the ‘post-Election’ move in EUR/JPY.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

We go a bit closer on the hourly chart below in the effort of focusing on more recent price action. EUR/JPY posed a break out of a bearish channel in early March and since then, it’s appeared that bulls are getting a bit more motivated.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

EUR/GBP

One pair that will likely remain as an attractive candidate for Euro bulls is EUR/GBP. A heavy dose of caution should be utilized here as GBP/USD is trading very near 30-year lows and the prospect of significant weakness from here could be difficult to prognosticate. Below, we start with the ‘big picture’ look and work our way-down.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

Below, we’re looking at the bullish channel that’s shown up in EUR/GBP after the top-side burst from the Brexit referendum.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

And below, we go down further to look at the 4-hour setup in EUR/GBP. We’ve added a Fibonacci retracement over the bearish move from the January top down to the February low. Notice that current price action is continuing to resist at around the 61.8% Fibonacci retracement of this move. For those looking to buy, support at the 50% marker of this retracement at around .8625 could be attractive for such a purpose.

Euro Price Action Primed for ECB: EUR/USD, EUR/JPY, EUR/GBP

Chart prepared by James Stanley

--- Written by James Stanley, Analyst for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

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

DISCLOSURES

News & Analysis at your fingertips.