The forex trading activity around the euro pairs had been weak lately, most likely due to low liquidity ahead of some important events. Today we have the ECB Interest Rate Decision, which should provide no surprise, but the market will focus on the ECB President Mario Draghi speech, scheduled to start at 00:30pm GMT, as usual.
Will the ECB change its view today?
For months there have been rumors that the ECB will start to taper its’ unconventional asset purchases program, since the EU economy had managed to recover and the inflation is heading upwards towards the ECB target of below but close to 2%.
However, there are risks involved in this decision, that’s why the ECB had not mentioned this issue until now. The strong euro appreciation against most majors raises concerns as it can hurt the recovery and also, since the inflation is still below the ECB target, the institution had preferred to avoid talking about the subject until now.
But since the autumn is here and the QE program will expire at the end of the year, most of the analysts expect the ECB President to start to give clues regarding the next step the institution will take.
We expect euro volatility to surge during and after the event. If the ECB will deliver and market expectations will be met, the euro could surge higher, while on the other hand, if the same cautious tone will be adopted, we might see a little short-term dip.
Be aware that around this kind of events forex trading activity is very intense and if you are using leverage, you can get really hurt.
For those of you who want to trade the euro today, watch the press conference closely and see what new info will come out.
Since you are using leverage, adjusting your risk management is a highly important factor, so be careful how you are dealing with it.
To sum up, the euro had been in an impulsive bull trend for a few months and is expected to continue higher, regardless of the fact that the ECB will keep a cautious tone today.
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