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Currency Volatility: EURUSD Price Could Gyrate Ahead of ECB, Fed

Currency Volatility: EURUSD Price Could Gyrate Ahead of ECB, Fed

Rich Dvorak, Analyst
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  • EURUSD overnight and 1-week implied volatility measures are seemingly low when considering upcoming event risk from the European Central Bank and Federal Reserve
  • The ECB and Fed are both expected to release the minutes from their March meetings which should provide further insight on the central banks’ respective positions on TLTROs and balance sheet normalization
  • Looking for comprehensive Q2 EURUSD outlook? Download DailyFX’s free trading forecasts on the Euro and US Dollar Here

EURUSD implied volatility appears to be relatively low given potential catalysts on deck that could spark serious price action in the currency pair. With overnight and 1-week implied volatility readings on EURUSD forex options contracts currently standing at 5.57 percent and 5.70 percent respectively, currency traders might anticipate an uptick in volatility from these low levels.


EURUSD Implied Volatility Ahead of ECB and FedForex market implied volatility for EUR, USD, GBP, JPY, CHF, CAD, AUD, NZDCurrency market implied volatility for EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, NZDUSD

The ECB is slated to release minutes from last month’s interest rate meeting at 11:30 GMT tomorrow which look to shed light on the central bank’s latest round of TLTROs. The minutes could also touch on how dovish the ECB is willing to take monetary policy to support Europe’s deteriorating economy. If currency market participants interpret the ECB’s tone as more dovish than initially projected by President Mario Draghi, the Euro could come under pressure.

To close out this week, a slew of US employment data will be announced with the latest unemployment rate and change in non-farm payrolls likely taking the spotlight on Friday. A weak print in US jobs numbers could send the US Dollar lower.


Euro US Dollar Forex economic calendar EURUSD

Visit the DailyFX Economic Calendar for a comprehensive list of upcoming economic events and data releases affecting the global markets.

Next week is chalk-full of economic events and data releases that pose significant event risk to EURUSD traders. The ECB is likely to take the spotlight early on in next Wednesday’s session with another monetary policy update. However, the possibility of a weak inflation reading out of the US in addition to the release of the Fed’s minutes from its own monetary policy meeting last month could keep EURUSD weakness at bay.

Check out these key EURUSD technical levels to watch ahead of upcoming event risk.

On the contrary, an increasingly dovish ECB or higher than expected US inflation has potential to send EURUSD tumbling. Nevertheless, the FOMC minutes slated to cross the wires at 18:00 GMT next Wednesday might put upward pressure on EURUSD.

- Written by Rich Dvorak, Junior Analyst for DailyFX

- Follow @RichDvorakFX on Twitter

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