Trading News Events: European Central Bank Interest Rate Decision

Trading News Events: European Central Bank Interest Rate Decision

4 December 2014, 11:56
Sergey Golubev
7
460

EUR/USD may continue to mark fresh monthly lows over the next 24-hours of trade should the European Central Bank (ECB) take additional steps to further support the monetary union.

What’s Expected:



Why Is This Event Important:

Indeed, there’s growing speculation that the Governing Council will broaden the scope of its non-standard measures while implementing a large-scale quantitative easing (QE) program to better achieve its one and only mandate for price stability, and the single currency remains at risk of facing additional headwinds in 2015 as the outlook for growth and inflation remains subdued.

Nevertheless, the ECB may merely reiterate the policy statement from the November 6 meeting as the central bank gauges the impact of the targeted Long-Term Refinancing Operations (T-LTRO), and we may see a relief rally in EUR/USD should the Governing Council make an attempt to buy more time.

How To Trade This Event Risk

Bearish EUR Trade: ECB Implements Additional Monetary Support

  • Need red, five-minute candle following the updated forward-guidance to consider a short EUR/USD trade
  • If market reaction favors a short Euro trade, sell EUR/USD with two separate position
  • Set stop at the near-by swing high/reasonable distance from cost; at least 1:1 risk-to-reward
  • Move stop to entry on remaining position once initial target is met, set reasonable limit
Bullish EUR Trade: Governing Council Looks to Buy More Time
  • Need green, five-minute candle to favor a long EUR/USD trade
  • Implement same strategy as the bearish euro trade, just in the opposite direction
Potential Price Targets For The Release

EUR/USD Daily Chart

  • Will retain the approach to sell-bounces in EUR/USD as the bearish RSI break takes shape.
  • Interim Resistance: 1.2600 pivot to 1.2610 (61.8% expansion)
  • Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)
Impact that the ECB rate decision has had on EUR/USD during the last meeting

PeriodData ReleasedEstimateActualPips Change
(1 Hour post event )
Pips Change
(End of Day post event)
NOV 2014 11/06/2014 11:45 GMT 0.05% 0.05% -99 -149
Share it with friends: