Currencies: Euro trims losses after U.S. job-openings report

NEW YORK (MarketWatch) — The euro trimmed its earlier losses Tuesday after the Department of Labor said U.S. job openings rose to a 14-year high in February.

The euro EURUSD, -0.58%  was at $ 1.0875, compared with $ 1.0937 Monday evening, trimming its earlier losses after the Labor Department showed that job openings rose to 5.13 million in February from 4.97 million in January. The dollar was little-changed against its other rivals after the report.

The euro had moved lower against the dollar early Tuesday as traders in Europe returned to their desks after a four-day weekend that included market holidays on Friday and Monday.

The euro had surged against the dollar Friday after the U.S. Labor Department reported the weakest rate of jobs growth in 15 months, and it continued to trade above $ 1.09 during Monday’s session.

But swings in the euro-dollar exchange rate were likely exaggerated over the last two sessions amid thin trading volume, analysts said. That said, thin volumes don’t always affect currency price moves, according to RBC Capital Markets.

“We’re seeing liquidity return and prices start to normalize,” said John Doyle, director of markets at Tempus Inc.

Currency traders appeared to shrug off data showing the eurozone economy grew at its fastest pace in 11 months in March.

Earlier in the global day, the Reserve Bank of Australia defied the market’s expectations and left its cash target rate, its benchmark interest rate, unchanged, sending the Australian dollar to its highest level against the buck in eight days.

The aussie AUDUSD, +0.74%  hit a session-high of 77.13 cents, before falling to 76.55 cents in recent trade. It traded at 75.99 cents Monday evening.

Financial markets had been pricing in a 75% chance the benchmark interest rate would be trimmed by 0.25 percentage point to a record-low 2.0%.

Read: Australia keeps interest rates steady at 2.25%

In other Asia trade USDJPY, +0.70%  rose to ¥120.17, compared with ¥119.48 late Monday in North America.

Boris Schlossberg, managing director of FX strategy at BK Asset Management, said that rising Treasury yields are attracting foreign flows to the U.S. dollar.

“In North America today the calendar is nearly barren so price action will likely be driven by equity and fixed income markets,” Schlossberg said in a note to clients.

The ICE U.S. Dollar Index DXY, +0.55% a measure of the dollar’s strength against a basket of six rivals, was up 0.7% to 97.4360.

Factbox – How low can they go? Central bank policy easing in 2015

(Reuters) – A total of 26 central banks and monetary authorities around the world have eased policy this year, in an unprecedented wave of measures aimed at boosting growth and bolstering inflation. Below is a chronological list of the moves.

Jan. 1 UZBEKISTAN

Uzbekistan’s central bank cuts its refinancing rate to 9 percent from 10 percent.

Jan. 7/Feb. 4/March 31 ROMANIA

Romania’s central bank shaved another quarter point off its benchmark interest rate to a record low of 2.00 percent with weak inflation expanding its room to ease.

Jan. 15 SWITZERLAND

The Swiss National Bank stuns markets by scrapping its three-year-old cap on the franc’s value against the euro, leading to a surge in the currency. The de facto tightening, however, is in part offset by a cut in the interest rate on certain sight deposit account balances of 0.5 percentage points, to -0.75 percent.

Jan. 15/March 4 INDIA

The Reserve Bank of India unexpectedly lowers its policy rate for the second time this year, backing the 10-month-old government of Prime Minister Narendra Modi in its push to revive economic growth as inflation cools.

Jan. 15 EGYPT

Egypt’s central bank makes a surprise 50-basis-point cut in its main interest rates, reducing the overnight deposit and lending rates to 8.75 and 9.75 percent, respectively.

Jan. 16 PERU

Peru’s central bank unexpectedly cuts its benchmark interest rate to 3.25 percent from 3.5 percent after the country posts its worst monthly economic expansion since 2009.

Jan. 20 TURKEY

Turkey’s central bank lowers its main interest rate, but draws heavy criticism from government ministers, who say the 50- basis-point cut, five months before a parliamentary election, is not enough to support growth.

Jan. 21 CANADA

The Bank of Canada cuts interest rates to 0.75 percent from 1 percent, where they had been since September 2010, ending the longest period of unchanged rates in Canada since 1950.

Jan. 22 EUROPEAN CENTRAL BANK

The ECB launches a government bond-buying programme which will pump over 1 trillion euros into the sagging euro zone economy, starting in March and running to September next year and perhaps beyond.

Jan. 24 PAKISTAN

Pakistan’s central bank cuts its key discount rate to 8.5 percent from 9.5 percent, citing lower inflationary pressure because of falling global oil prices. Central Bank Governor Ashraf Wathra says the new rate will be in place for two months, until the next central bank meeting to discuss further policy.

Jan. 28 SINGAPORE

The Monetary Authority of Singapore unexpectedly eases policy, saying in an unscheduled policy statement that it will reduce the slope of its policy band for the Singapore dollar because the inflation outlook has “shifted significantly” since its last review in October 2014.

Jan. 28 ALBANIA

Albania’s central bank cuts its benchmark interest rate to a record low 2 percent. This follows three rate cuts last year, the most recent in November.

Jan. 30/March 13 RUSSIA

Russia’s central bank cuts its one-week minimum auction repo rate by 100 basis points to 14 percent, less than two months after cutting it by two points to 15 percent, as fears of recession mount following the fall in global oil prices and Western sanctions over the Ukraine crisis.

Feb. 3 AUSTRALIA

The Reserve Bank of Australia cuts its cash rate to an all-time low of 2.25 percent, seeking to spur a sluggish economy while keeping downward pressure on the local dollar.

Feb. 4/28 CHINA

China’s central bank cuts interest rates for the second time in a month to fight off economic slowdown and rising deflation risks. Following a system-wide cut to bank reserve requirements in early February, policymakers follow up with a cut in benchmark interest and saving rates at the end of the month.

Jan. 19/22/29/Feb. 5 DENMARK

The Danish central bank cuts interest rates four times in less than three weeks and intervenes regularly in the currency market to keep the crown within the narrow range of its peg to the euro.

Feb. 2/March 19 COSTA RICA

Costa Rica’s central bank cuts its main interest rate by 0.25 percentage point to 4.5 percent, the second rate reduction in less than two months.

Feb. 13/March 18 SWEDEN

Sweden’s central bank cuts the key repo rate by 0.15 percentage points to -0.25 percent and says it will buy 30 billion Swedish crowns ($ 3.40 billion) of government bonds after already completing 10 billion crowns of purchases.

Feb. 17 INDONESIA

Indonesia’s central bank cuts its benchmark interest rate by a quarter of a percentage point to 7.5 percent, the first rate cut in three years.

Feb. 18 BOTSWANA

Botswana’s central bank cuts its benchmark lending rate by 100 basis points to 6.5 percent, saying the state of the economy and inflation outlook provided scope for easing monetary policy.

Feb. 23 ISRAEL

The Bank of Israel lowers its benchmark interest rate to 0.1 percent from 0.25 percent, its first reduction in six months, amid persistent deflation and a strengthening shekel.

March 4 POLAND

Poland’s central bank cuts interest rates by 50 basis points to an all-time low of 1.50 percent, to curb deflation and prevent excessive gains of its currency.

March 11 THAILAND

Thailand’s central bank cuts its benchmark interest rate by 25 basis points to 1.75 percent in a bid to spark the stubbornly sluggish economy. The cut is the first rate change in a year and expected by only five of 21 analysts in a Reuters poll.

March 12 SOUTH KOREA

South Korea’s central bank cuts interest rates for the first time in five months in a surprise move, lowering its base rate by 25 basis points to a record low of 1.75 percent.

March 12 SERBIA

Serbia’s central bank cuts its benchmark interest rate for the first time since November to 7.5 percent from 8 percent, to ward off deflation and support economic growth after a new IMF loan deal.

March 24 HUNGARY

Hungary’s central bank cuts its main interest rate for the first time in eight months, by 15 basis points to 1.95 percent, and flags further cautious easing as inflation evaporates.

(Compiled by Jamie McGeever; Editing by Larry King)

Kiwi hits high against euro, more to come

The New Zealand dollar has reached its highest level ever against the euro in what may be the first of more peaks as the euro falls foul of the European Central Bank’s bond-buying programme.

The kiwi hit a record 70 euro cents on Monday morning, and was trading at 69.96c at 5pm on Monday in Wellington from 69.47 cents at 5pm on Friday. The local currency rose to US73.64 cents from US73.39c at the New York close on Friday.

Sam Tuck, senior FX strategist at ANZ New Zealand, says the kiwi may dip on this week’s GlobalDairyTrade dairy auction as he’s picking prices will be weak but there will be a reminder of the strength of the New Zealand economy when fourth quarter gross domestic product figures are released on Thursday.

The report is expected to show the New Zealand’s economy expanded at a 0.7 per cent pace in the fourth quarter, for an annual average growth rate of 3.2 per cent, according to a Reuters poll.

The US dollar is at its highest level in 12 years amid speculation the Federal Reserve Open Market Committee will drop the word “patient” from its policy statement at 7am Thursday New Zealand time, suggesting the Fed is getting close to lifting its benchmark interest rate which has been near zero since 2008.

That leaves the euro out of favour for as the European Central Bank buys 60 billion euros worth of bonds per month it pushes bond yields lower and investors look offshore for returns, weakening the euro.

“This morning we got above 70.00 euro cents and our expectation is the euro will continue to decline over 2015. Our forecasts expect kiwi-euro to get to 73 to 74 by the end of the year,” Mr Tuck said.

On Monday, the New Zealand dollar gained to 96.23 Australian cents from A95.99c on Friday.

The local currency was at 49.86 British pence from 49.58 pence on Friday and 89.29 yen from 89.58 yen.

The trade-weighted index rose to 77.95 from 77.87.

Forex – Weekly outlook: March 2 – 6

Investing.com –

Investing.com – The dollar pushed higher against the yen and the euro on Friday after data showed that the U.S. economy expanded modestly in the last quarter of 2014, supporting expectations for interest rate increases.

The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 2.2% in the last three months of 2014, down from an initial estimate of 2.6% but ahead of expectations for a downward revision to 2.1% growth.

Other reports showed that U.S. pending home sales rose to a one-and-a-half year high in January and consumer sentiment also remained strong.

The February reading of the University of Michigan’s consumer sentiment index was revised up to 95.4 from the preliminary reading of 93.6. While this was down from the previous months final reading of 98.1, it was still the second highest level since January 2007.

USD/JPY ticked up 0.13% to 119.56 in late trade, while EUR/USD was steady near one-month lows at 1.1194, off earlier highs of 1.1244.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the day almost unchanged at 95.29, not far from Thursday’s one-month highs of 95.43.

The dollar rallied on Thursday after stronger-than-forecast data on U.S. durable goods orders added to indications that the economic recovery is on track.

Earlier in the week, Federal Reserve Chair Janet Yellen said that if the economy keeps improving as the bank expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

Among other currencies, the pound hit fresh seven-year highs against the euro on Friday and pushed higher against the dollar.

EUR/GBP was down 0.30% to 0.7247 in late trade, while GBP/USD advanced 0.21% to 1.5437, still below the previous session highs of 1.5551.

EUR/JPY was up 0.15% to 133.9, recovering from earlier one-month lows of 133.43.

In the week ahead, Friday’s U.S. employment report will be closely watched, while central banks in Australia, Canada, the U.K. and the euro zone are all to hold monetary policy meetings.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, March 2

Australia is to release a report on company operating profits.

China is to publish the revised reading of the HSBC manufacturing index.

The U.K. is to publish private sector data on house price inflation, as well as what will be a closely watched report on manufacturing activity.

The euro zone is to produce preliminary data on consumer prices and a report on unemployment.

In the U.S., the Institute of Supply Management is to report on manufacturing activity.

Tuesday, March 3

The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

Australia is also to release reports on building approvals and the current account.

In the euro zone, Spain is to report on the change in the number of people employed.

The U.K. is to publish the results of a survey on construction sector activity.

Later Tuesday, Canada is to release the monthly report on gross domestic product.

Wednesday, March 4

Australia is to release data on fourth quarter GDP growth.

China is to publish the HSBC services index.

The euro zone is to release revised data on service sector output, as well as a report on retail sales.

The U.K. is also to release survey data on service sector activity.

The Bank of Canada is to announce its benchmark interest rate and publish its rate statement.

The U.S. is to release the ADP non-farm payrolls report, while looks at private sector jobs growth. Later in the day, the ISM is to report on services sector activity.

Thursday, March 5

Australia is to publish report on retail sales and the trade balance.

In the euro area, Germany is to release data on factory orders.

The Bank of England is to announce its official bank rate.

The European Central Bank is also to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.

The U.S. is to release the weekly report on initial jobless claims and data on factory orders.

Canada is to publish its Ivey PMI.

Friday, March 6

The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets.

Switzerland is also to release data on consumer prices.

Both the U.S. and Canada are to release trade data and Canada is also to report on building permits.

The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings.

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Pound Reaches 7-Year High Versus Euro as ECB Reveals QE Program

The pound rose to its strongest level in almost seven years against the euro as the European Central Bank said it would inject more than 1.1 trillion euros ($ 1.2 trillion) into the eurosystem through buying debt in the region.

Sterling’s third weekly advance versus the common currency was helped when the U.K.’s unemployment rate fell to a six-year low and December retail sales unexpectedly rose. The pound declined to the lowest level in 18 months against the dollar as minutes from the Bank of England’s latest policy meeting showed officials voted unanimously for the first time since July to hold interest rates at record lows. U.K. government bonds rose, with 10-year yields touching the least since August 2012.

“We’ve broken through some pretty important resistance and supports in euro-sterling,” said Peter Kinsella, a senior currency strategist at Commerzbank AG in London. “It seems that with the ECB’s actions, where they have more than delivered on their commitment to increase their balance sheet, it’s probably the case that this down move in euro-sterling will continue. You just don’t have any reason to buy the euro now from an investment point of view.”

The pound appreciated 1.8 percent to 75.02 pence per euro in the week through 4:55 p.m. Friday in London. It touched 74.28 pence that day, the strongest since February 2008. Sterling weakened 0.8 percent in period through Jan. 23 to $ 1.5029, having grazed $ 1.4952 the same day, the lowest since July 2013. The U.K. currency will strengthen to 72 pence per euro by year-end, Commerzbank’s Kinsella forecast.

Euro-Dollar Tumble

ECB President Mario Draghi said in Frankfurt on Thursday that the central bank will buy private and public securities of as much as 60 billion euros ($ 68 billion) a month in program intended to run until September 2016. That implied more than 1.1 trillion euros will additionally circulate, potentially weakening the euro against the pound and other currencies.

The euro tumbled 2.5 percent in the week to $ 1.1276 and was as low as $ 1.1115, an 11-year record.

BOE policy makers Martin Weale and Ian McCafferty dropped their call for an interest-rate increase as plunging oil prices raised the risk that slow inflation would become entrenched, minutes from the Jan. 7-8 Monetary Policy Committee meeting published on Wednesday in London showed. The benchmark interest rate has been at 0.5 percent since March 2009.

Forward contracts showed investors are betting the sterling overnight interbank average, or Sonia, will rise to 0.50 percent at the BOE’s December policy meeting, from 0.435 percent next month. Royal Bank of Canada, BNP Paribas SA and Deutsche Bank all pushed back their forecasts for the first BOE rate increase to November at the earliest.

Gilt Reaction

Benchmark 10-year gilt yields fell six basis points, or 0.06 percentage point, in the week to 1.48 percent. The 2.75 percent bond due in September 2024 rose 0.515, or 5.15 pounds per 1,000-pound face amount, to 111.36. The rate brushed 1.44 percent on Friday, the lowest since August 2012.

Thirty-year yields dropped eight basis points in the week to 2.15 percent, having touched a record-low 2.124 percent.

Data set to be released next week will show the U.K. economy grew 0.6 percent during the fourth quarter, from 0.7 percent in the three months through September, according to the median estimate of economists in a Bloomberg News survey.

BOE Governor Mark Carney is scheduled to speak on Saturday in Davos, Switzerland.

To contact the reporter on this story: Eshe Nelson in London at [email protected]

To contact the editors responsible for this story: Paul Dobson at [email protected] Todd White, Mark McCord

Currencies: Euro slips amid further QE speculation

The euro is still close to a nine-year low

LONDON (MarketWatch) — The euro slumped and traded close to a nine-year low against the dollar on Monday after a report that the European Central Bank is moving closer to announcing a full-scale quantitative-easing program.

The shared currency EURUSD, -0.32%  exchanged hands at $ 1.1817, down from $ 1.1839 late Friday. Last Thursday, the euro dropped to a low of $ 1.175, the lowest since December 2005.

The euro has shaven off 5.2% over the past three months, as a sluggish recovery and worryingly low inflation have raised expectations that the ECB will go all out on monetary easing and start to buy sovereign bonds. CNBC reported on Monday that the central bank is planning to design such a bond-buying program based on how much a national bank has paid to the ECB every year. This would then determine how much the ECB would buy of that country’s government bonds, CNBC said, citing a source close to the central bank.

The report comes ahead of the ECB meeting on Jan. 22, when economists are increasingly expecting the bank to announce a full-blown QE program after the latest consumer-price data showed the eurozone is now battling with negative inflation.

In other currencies, the ICE dollar index DXY, +0.52% a measure of the greenback’s strength against a trade-weighted basket of six rival currencies, traded at 92.10, compared with 91.9450 on Friday, when the gauge fell by 0.46%. The loss came after the U.S. jobs report for December showed hourly wage growth contracted last month, causing investors to delay their expectations for when the Federal Reserve will begin raising its benchmark interest rate.

Against the yen, the dollar USDJPY, +0.45% rose to ¥118.97 from ¥118.50 late Friday.

The pound GBPUSD, -0.07%  fell to $ 1.5112 from $ 1.5159.

Dollar Stronger Than $1.18 per Euro Before Payrolls; Yen Weakens

The dollar stayed stronger than $ 1.18 per euro for a second day on speculation U.S. payrolls data today will boost the case for Federal Reserve interest-rate increases this year.

The single currency was poised for a fourth weekly decline, the longest streak since September. European Central Bank President Mario Draghi said stimulus measures may include sovereign-bond purchases and concern lingered that a win for Greece’s opposition in this month’s elections could lead the country to exit the euro. The yen weakened for a third day as global stocks gained, reducing demand for haven assets.

“The trend is still for a stronger dollar,” said Kazuo Shirai, a trader at MUFG Union Bank NA in Los Angeles. “The euro is likely to head lower until the latter half of this month, when we get some clarity on Greece.”

The dollar was at $ 1.1792 per euro as of 9:18 a.m. in Tokyo after reaching $ 1.1754 yesterday, the strongest level since December 2005. The dollar appreciated 0.1 percent to 119.80 yen. The euro was little changed at 141.27 yen.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 0.2 percent yesterday to 1,147.54, the highest close in data going back to 2004.

The pound was near a more than one-year low after Bank of England policy makers maintained the benchmark interest rate at a record-low 0.5 percent yesterday, in line with the forecast of all 42 economists in a Bloomberg survey.

Sterling was at $ 1.5085 after touching $ 1.5035 yesterday, the lowest level since July 2013.

Long Dollar

The dollar gained after the Labor Department said jobless claims decreased by 4,000 to 294,000 in the week ended Jan. 3. Separate reports today will show employers added 240,000 workers and the jobless rate fell to a 6 1/2-year low of 5.7 percent in December, according to analysts surveyed by Bloomberg News.

“Over 2015 and through 2016, we have an investment strategy of being broadly long of U.S. dollars,” Sue Trinh, senior currency strategist at Royal Bank of Canada in Hong Kong, said of bets for the greenback to strengthen in a Bloomberg Television interview. “That will get more legs, especially as the first Federal Reserve rate hike comes onto the radar.” The bank forecasts the dollar to gain to 132 yen in 2015, she said, a level last seen in 2002.

There’s a 58 percent likelihood the U.S. Federal Reserve will raise its target federal funds rate from a zero-to-0.25 percent range to at least 0.5 percent by September, futures data compiled by Bloomberg show.

Draghi Letter

Europe’s 19-nation currency depreciated against most major peers yesterday as Draghi, in a letter to European Parliament lawmaker Luke Flanagan, echoed his remarks made after the Governing Council’s last monetary-policy meeting on Dec. 4. ECB staff are preparing a stimulus package for officials to consider at their next meeting on Jan. 22.

“The ECB is fairly unanimous in trying to get the euro lower as its main strategy,” Ken Dickson, an Edinburgh-based director of foreign exchange at Standard Life Investments Ltd., said by phone. “It does appear that quantitative easing is more likely sooner than later,” he said of the bond-buying strategy.

To contact the reporter on this story: Kevin Buckland in Tokyo at [email protected]

To contact the editors responsible for this story: Garfield Reynolds at [email protected] Nicholas Reynolds

Euro Crosses to Target Multi-Year Lows on ECB Easing Cycle

DailyFX.com –

The growing deviation in monetary policy continues to foster a bearish outlook for EUR/GBP and EUR/CAD as the European Central Bank (ECB) struggles to achieve its one and only mandate for price stability. Nevertheless, the Bank of England (BoE) remains on track to raise the benchmark interest rate in 2015 as the central bank anticipates a faster recovery in the U.K, while the Bank of Canada (BoC) may come under increased pressure to further normalize monetary policy amid the stickiness in price growth.

EURGBP Weekly

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Euro Crosses to Target Multi-Year Lows on ECB Easing Cycle

EUR/GBP remains poised for a further decline in 2015 as it preserves the bearish trend carried over from back in 2009. We will continue to look for a series of lower highs & lows in EUR/GBP as BoE Governor Mark Carney prepares U.K. household and business for higher borrowing-costs while the ECB keeps the door open for additional monetary support. With that said, EUR/GBP may make a more meaningful run at the 2012 low (0.7750) in the year ahead, and we will continue to favor the downside targets in 2015 as the fundamentals and technicals point to a further decline in the exchange rate.

EURCAD Daily

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Euro Crosses to Target Multi-Year Lows on ECB Easing Cycle

After carving a head-and-shoulders top in 2014, the key reversal in EUR/CAD should continue to take shape in 2015 as the Bank of Canada scales back its dovish tone for monetary policy. Indeed, the BoC may follow the Fed and show a greater willingness to raise the benchmark interest rate next year as inflation holds above the 2% target, and Governor Stephen Poloz may continue to change his tune over the near to medium-term as the central bank head sees a broadening recovery in Canada. With that said, we will continue to look for a series of lower highs & lows in EUR/CAD and favor the downside targets especially as the fundamental outlook for the euro-area remains clouded with high uncertainty.

original source

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Bearish EUR/USD Outlook Vulnerable If ECB Attempts to Buy Time

European Central Bank (ECB) to Announce Further Details Surrounding Non-Standard Measures.

Will ECB President Mario Draghi Talk Down the Euro?

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Trading the News: European Central Bank (ECB) Interest Rate Decision

Further details surrounding the European Central Bank’s (ECB) asset-back securities (ABS) and covered-bond purchase program may heighten the bearish sentiment surrounding the Euro, but we may see a relief rally in the EUR/USD should the Governing Council use the interest rate decision as an attempt to buy more time.

What’s Expected:

EUR/USD ECB

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Why Is This Event Important:

The ECB may refrain from addressing the unanswered questions surrounding the non-standard measures as President Mario Draghi waits for the results of the second targeted long-term refinancing operation (T-LTRO), and the EUR/USD may face a near-term correction should the fresh developments dampen bets for more easing.

Expectations: Bearish Argument/Scenario

The ECB may sound increasingly dovish amid the growth threat for deflation, and the EUR/USD may face a further decline should the council keep the door open for more non-standard measures, which may quantitative easing (QE).

Risk: Bullish Argument/Scenario

Nevertheless, the ECB may scale back its dovish outlook amid the improvements in the monetary union, and the Euro may face a near-term bounce should the central bank adopt a wait-and-see approach.

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How To Trade This Event Risk(Video)

Bearish EUR Trade: ECB Keeps Door Open for More Non-Standard Measures

  • Need red, five-minute candle following the updated foreward-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 Tries 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

Read More:

Scalping the AUDCHF Reversal- 8360 Resistance in Focus

COT: US Dollar Speculator Long Position is Largest on Record

Potential Price Targets For The Release

EUR/USD Daily

EUR/USD Daily Chart

Chart – Created Using FXCM Marketscope 2.0

  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short the dollar, with the EUR/USD ratio current sitting at +1.34.
  • Interim Resistance: 1.3010 (50.0% retracement) to 1.3020 (23.6% expansion)
  • Interim Support: 1.2450 (78.6% retracement) to 1.2500 pivot

Impact that the ECB rate decision has had on EUR/USD during the last meeting

September 2014 European Central Bank Interest Rate Decision

EUR/USD Chart

The European Central Bank unexpectedly cut the benchmark interest rate to fresh record low of 0.05% as the downside risks surrounding the growth outlook raises the threat for deflation. The Governing Council also laid out an asset-backed securities (ABS) purchasing plan to further boost private-sector lending, with details to be disclosed at the October 2 policy meeting. As a result, it seems as though the Euro will face additional headwinds over the near to medium-term as the ECB continues to push monetary policy into unchartered territory. The EUR/USD plummeted following the new wave of monetary support, with the pair dropping over 100 pips during the North American trade, but we saw a minor bounce going in the close as the euro-dollar ended the day at 1.2932.

— Written by David Song, Currency Analyst and Shuyang Ren

To contact David, e-mail [email protected] Follow me on Twitter at @DavidJSong.

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Euro to Face Draghi Testimony- USD/JPY Threatens Bearish Divergence

DailyFX.com –

Talking Points:

EUR/USD Fails to Benefit from Upbeat 3Q GDP Ahead of ECB President Draghi’s Testimony.

USD/JPY Threatens Bearish RSI Momentum Ahead of Japan 3Q GDP & BoJ Meeting.

USDOLLAR Marks Fresh Monthly High on Retail Sales- FOMC Minutes in Focus.

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EUR/USD

Chart – Created Using FXCM Marketscope 2.0

  • Despite the better-than-expected 3Q Gross Domestic Product (GDP) report coming out of the euro-area, EUR/USD remains capped ahead of the 1.2500 handle; focus now turns to European Central Bank (ECB) President Mario Draghi’s quarterly testimony to the European parliament.
  • Will continue to favor a bearish outlook for EUR/USD as the Governing Council prepares to implement more non-standard measures in December, with the next downside objective coming in around 1.2280-90 (100% expansion).
  • DailyFX Speculative Sentiment Index (SSI) continues to flip around this week, but retail-crowd are net-short on EUR/USD going into the weekend, with the ratio currently holding at -1.05.

USD/JPY

  • Will keep a close eye on the Relative Strength Index (RSI) for USD/JPY as the oscillator threatens the bearish momentum carried over from back in September.
  • Beyond Japan’s 3Q GDP report & the Bank of Japan (BoJ) interest rate decision, headlines surrounding the fiscal outlook may further dampen the appeal of the Yen amid the heightening risk for a snap election in December.
  • Long-term outlook for remains bullish for USD/JPY amid the uncertainties surrounding the fiscal & monetary policy outlook for Japan, with the next topside target coming in around 117.00-10 (61.8% expansion).

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Read More:

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USDOLLAR(Ticker: USDollar):

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Euro to Face Draghi Testimony- USD/JPY Threatens Bearish Divergence

Chart – Created Using FXCM Marketscope 2.0

  • Despite the better-than-expected U.S. Retail Sales report, the Dow Jones-FXCM U.S. Dollar Index is struggling to retain the advance to 11,323 even as St. Louis Fed President James Bullard sees scope to raise the benchmark interest rate at the end of 1Q 2015; will Federal Open Market Committee (FOMC) Minutes highlight a greater dissent?
  • Nevertheless, will keep a close eye on the headlines coming out of the G20 Summit in Brisbane amid the growing deviation in monetary policy.
  • Will continue to look for a topside RSI break out of the bearish formation favor a more meaningful push into the 11,312 (78.6% retracement) and 11,351 (78.6% expansion) region.

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— Written by David Song, Currency Analyst

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