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EURUSD and Risk Pulls Back After Fed, Momentum Depends on ECB

EURUSD and Risk Pulls Back After Fed, Momentum Depends on ECB

John Kicklighter, Chief Strategist

Stimulus hopes - one of the last legs of support for risk appetite trends - took a serious blow this past session after the Fed said no to QE3. If the ECB similarly disappoints in the coming session, it could prove painful for both EURUSD and risk trends. The rally from the Euro, US equity indexes and other 'risk-sensitive' assets at the end of last week was heavily attributed to the vow by ECB President Draghi to do whatever was necessary to safeguard the Monetary Union. This cheerleading stuck when supposed proposals were circulated of what could be done to offer more support. Expectations are high and room to further stimulus is low. Furthermore, the market is more aware of short-term fixes and structural reform. We cover the options and the impact on the Euro and risk in today's video - as well as a caveat for the ECB to come away successful without action.

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

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