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EURUSD: Implied Volatility at 6-Week High as Traders Await ECB

EURUSD: Implied Volatility at 6-Week High as Traders Await ECB

2019-03-06 20:28:00
Rich Dvorak, Junior Analyst
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EURUSD IMPLIED VOLATILITY – TALKING POINTS

  • EUR traders gear up for volatility ahead of the European Central Bank’s interest rate decision slated for 12:45 GMT tomorrow
  • Remarks from ECB President Mario Draghi will likely dictate the size and direction of price action
  • DailyFX provides a variety of trading resources found in our free Forex Education Center.For additional insight on currencies and the global markets, download the free DailyFX Top Trading Opportunities in 2019 Forecast

The overnight implied volatility on EURUSD forex option contracts exploded to its highest level since January 23 as currency markets prepare for potentially formidable price action. EURUSD traders are likely anticipating the European Central Bank’s rate review and follow-up commentary from President Mario Draghi to cause substantial price swings in the currency pair.

CURRENCY MARKET IMPLIED VOLATILITY AND TRADING RANGES

Currency market 1-day and 1-week implied volatility for EURUSD, GBPUSD, USDJPY, USDCAD, USDCHF, AUDUSD and NZDUSDForex Market Overnight and Weekly Implied Volatility

Although the ECB looks set to reiterate its zero-interest rate policy, the Eurozone’s head central banker may signal further willingness to support the bloc’s economy as downbeat data continues to disappoint. A tone that is interpreted as relatively dovish could put pressure on the Euro and send the currency to multi-week lows against the USD.

UPCOMING EURUSD DATA RELEASES AND EVENT RISK

Upcoming European Central Bank ECB interest rate decision and Eurozone economic data

Visit the DailyFX Economic Calendar for a full list of data releases and event risks that impactUSD, GBP, CAD, JPY, AUD, CNY, EUR, CHF, NZD and MXN currencies.

Markets will also eye final readings on Eurozone employment and GDP numbers. Fresh job data out of the US in addition to the country’s consumer credit report should is likely on the radar as well.

EURUSD CURRENCY PRICE CHART: 4-HOUR TIME FRAME (JANUARY 30, 2019 TO MARCH 06, 2019)

EURUSD Currency Price Chart Prior to ECB Interest Rate Meeting March 2019

EURUSD spot prices evidently coiled into a symmetrical triangle pattern between the currency pair’s February high and low. A breakout would suggest a continuation of the longer-term downtrend. EURUSD’s one-day trading range derived from overnight implied volatility implies that prices will likely remain between the 1.1376 and 1.1260 handles.

Additional Insight:

EURUSD Rate Forecast – Bearish Series Brings 2019 and 2018 Low on Radar

EURUSD Holds Support Ahead of ECB; USDCAD Rallies to Two-Month High

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Written by Rich Dvorak, Junior Analyst for DailyFX

Follow on Twitter@RichDvorakFX

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

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