I still like a short play for the simple fact that we have a rate hike decision from the ECB tomorrow morning at 7:45 am EST. A short entry order??? Aren’t you supposed to go long on a currency when interest rates are raised. Well, I’m looking to go short for two reasons:
- After the previous rate hike from the ECB the euro actually dropped. This is probably due to traders taking profits from the rise in value leading up to the interest rate decision.
- ECB president Trichet is expected to leave the markets guessing on future rate hikes to maintain a gradual appreciation in the euro.
Now, I will also have a long entry order in the highly unlikely case of Trichet coming out with hawkish comments after the rate decision. Well, here we go:
Short EUR/JPY at 145.95, stop at 146.15, pt1 at 145.70, pt2 at 145.50
Long EUR/JPY at 147.10, stop at 146.90, pt1 at 147.25, pt2 at 147.50
Please be cautious for whipsaws around the interest statement. Good luck and good trading!