The key focus for traders this week has been the ECB and what might be in store for the Eurozone in the months ahead.
It is widely expected that the deposit rates will be cut by 10bp at today’s meeting, but what will be of more interest to most, will be the forward guidance and any new proposals for QE.
Mario Draghi has been hinting as much of the recent months and most believe that September was the date for the official announcement.
It really is unclear as to what the ECB might have in store, but we need to be prepared for some volatility in the EUR/USD.
If the QE program doesn’t happen or it disappoints, there is some real upside risk for the Euro and we should expect a big move, given the expectations from the market. However, a big easing program including more bond buying, could send the Euro tumbling. There is also some risk of a delay here as well.
So in reality, markets are poised to act here, so it should be a very interesting European session in the making.
Forex Signal Update
The FX Leaders Team finished with 3 wins from 6 signals in what turned out to be a pretty active day, in the lead up to the ECB.
EUR/USD – Pending Signal
As mentioned, the EUR/USD is set for some volatility today and will be worth watching closely. If price can push into the lows, look for more downside. If the announcement disappoints or QE is delayed, we should expect a sharp move higher.
USD/CAD – Pending Signal
The USD/CAD has been in a relatively tight range in recent weeks and we have only just seen price pop below the 1.3200 level. There is a chance of a bounce and retrace here, so we will be on the lookout for a long signal in the short-term.
BTC is continuing to coil very hard around the $10,000 support level. Resistance at $11,000 is also strong to the upside.
Very little has changed here since yesterday and we are on the verge of a break out in one direction or the other.
As we can see on the charts, price is coiling in a triangle pattern, which is a sign of volatility contraction. That will lead to a big explosion in volatility so be ready in the next few sessions for what might lie ahead.