The ECB decision is coming up! Here’s a pair that could be due for either a bounce or big break, depending on how the event turns out.
Fresh Market Headlines & Economic Data:
- Asian shares slip as concerns on Coronavirus spreads
- Flights and train trips to Wuhan suspended ahead of Lunar New Year holiday
- Australia’s MI inflation expectations jump from 4.0% to 4.7%
- Australian employment change up 28.9K vs. 12.2K in Dec, 38.5K previous
- Australia’s jobless rate dipped from 5.2% to 5.1%
- Analysts pare RBA rate cut forecasts as unemployment hits nine-month low
- PBoC surprises by keeping interest rates on targeted medium-term lending facility unchanged
- Japanese all industries activity index up by 0.9% vs. 0.4% forecast
- API reported crude oil build of 1.57M barrels vs. projected draw
Upcoming Potential Catalysts on the Forex Calendar:
- ECB monetary policy decision at 12:45 pm GMT
- ECB press conference at 1:30 pm GMT
What to Watch: EUR/AUD
The Aussie may have enjoyed a strong run from impressive jobs data in the Asian session, but it could return those gains to the euro if the ECB sounds more upbeat than usual.
On its 1-hour time frame, EUR/AUD is trending higher inside a rising channel and the pair is currently testing support. The 100 SMA is above the 200 SMA to suggest that support is more likely to hold than to break, and these indicators coincide with the channel bottom to add to its strength as support.
Stochastic is indicating oversold conditions or exhaustion among sellers, too. This could be the chance for buyers to hop in and take price back up to the top of the channel around 1.6250.
No actual changes are expected from the ECB today as the focus will be on the strategic review to be launched. Any major adjustments to price stability and growth targets could impact the euro, with some analysts predicting that there could be more optimism surrounding recent economic data.
Planning on trading a bounce or a break on EUR/AUD today? Here’s MarketMilk’s volatility guide to help you set up your stop losses: