The highly anticipated European Central Bank monetary policy statement is right around the corner, which makes today’s breakout in EUR/USD one to watch.
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Fresh Market Headlines & Economic Data:
- Trump says Fed ‘boneheads’ should cut interest rates to zero ‘or less,’ US should refinance debt
- China waives tariffs on some US goods for first time since the trade war began
- Oil prices gain after U.S. inventories fall
- China August new bank loans rise to 1.21 trln yuan
- Weekly U.S. mortgage applications rise as buyer’s market takes hold
- US producer prices unexpectedly rise in August
- Boris Johnson’s suspension of UK Parliament unlawful, Scottish court rules
- The Westpac-Melbourne Institute Index of Australian consumer sentiment declined by 1.7% to 98.2 in Sept. from 100 in Aug.
- In July, New Zealand annual net migration gains 52.7K
- Japan’s Ministry of Finance Business Survey Index: All industries with over 1B yen capital +1.1 in September vs. -3.7 previous in June
Upcoming Potential Catalysts on the Forex Calendar:
- Japan Machinery orders & PPI at 12:50 am GMT (Sept. 12)
- Japan Tertiary industry activity at 5:30 am GMT (Sept. 12)
- German CPI & HICP at 7:00 am GMT (Sept. 12)
- Swiss PPI at 7:30 am GMT (Sept. 12)
- French CPI & HICP at 7:45 am GMT (Sept. 12)
- European Industrial production at 10:00 am GMT (Sept. 12)
- European Central Bank Monetary policy statement at 12:45 pm GMT (Sept. 12)
- ECB Press conference at 1:30 pm GMT (Sept. 12)
- Canadian House prices at 1:30 pm GMT (Sept. 12)
- U.S. CPI at 1:30 pm GMT (Sept. 12)
What to Watch: EUR/USD
EUR/USD Definitely makes the top spot of today’s watchlist, not only on the high likelihood of volatility up ahead due to the upcoming ECB monetary policy statement, but also on a fresh move out of a text book technical pattern.
First, touching upon the upcoming ECB meeting, expectations are that the ECB will pull the trigger on fresh stimulus. And to read more on why that is likely the case, read up on the event by checking out “What to Expect for the September ECB Statement” from Forex Gump. He touches on analyst predictions and recent rhetoric from ECB members, and with that, you can develop your directional bias going into the event.
For the bulls, a less dovish statement than expected may likely create a “buy-the-rumor, sell-the-news” reaction, especially now that we’re seeing euro selling in today’s session ahead of the event. If this is the case and the euro rallies enough to break the recent resistance around 1.1060 – 1.1080, this could draw in momentum players for a short-term run to the next resistance area (1.1100 – 1.1150)
For the bears, macro fundamentals and longer-term price action is currently in your favor, and if we don’t see a “less than expected dovish statement” scenario, then the trend lower is likely to hold. But as mentioned above, the “buy-the-rumor, sell-the-news” scenario has a legitimate chance of playing out after today’s fall in EUR/USD, so you may want to look at scaling into a short position from current levels up to the 61% Fibonacci retracement level marked chart above (around 1.1075), which is also within the daily ATR range of around 90 pips.