Anyone up for trading the euro ahead of the ECB decision? Here’s a potential setup you might wanna look into!
EUR/CHF is approaching an area of interest visible on its short-term time frame, and sellers might return at this point.
But before we look at the chart, let’s take a quick review of price action and market catalysts in the previous trading sessions:
- U.S. President Biden takes sweeping executive actions on first day in office
- Democrats take narrow control of U.S. Senate
- BlackRock to add bitcoin in eligible investments for two funds
- API reported increase of 2.6 million barrels in inventories
- New Zealand visitor arrivals rebound 0.8% after earlier 8.1% slump
- Japanese trade surplus narrowed from 0.55T JPY to 0.48T JPY
- Australian MI inflation expectations index dipped from 3.5% to 3.4%
- Australian employment up by 50K as expected in December
- Australia’s jobless rate improved from 6.8% to 6.6% vs. 6.7% forecast
- Bank of Japan upgrades next year’s growth forecast, kept policy unchanged
- Asian stocks in the green on optimism about Biden presidency
Upcoming Potential Catalysts on the Economic Calendar:
- 9:30 am GMT: BOE Credit Conditions Survey results
- 11:00 am GMT: U.K. CBI industrial orders expectations index
- 12:45 am GMT: ECB monetary policy decision
- 1:30 am GMT: ECB press conference
What to Watch: EUR/CHF
If you’re into trading the news, then this setup might be worth keeping tabs on in the next few hours.EUR/CHF is in correction mode as it pulls back to the area of interest or former support turned resistance around the 1.8000 major psychological mark.
This happens to line up with the 50% Fibonacci retracement level where euro bears might be hanging out. It looks like some sellers are eager to hop in at this 38.2% Fib, though!
The 100 SMA is below the 200 SMA to confirm that upside barriers are more likely to hold than break. Meanwhile, Stochastic is nearing the overbought zone to signal exhaustion among sellers.
No actual changes are expected from ECB head Lagarde and her fellow policymakers, but there might be some talk of inflation concerns. Some market watchers could also be on the lookout for verbal FX intervention, possibly mentioning how the central bank is keeping a close eye on euro strength these days.