eurusd is consolidating before ECB rate decision

There hasn’t been much movement in eur/usd pair this week. It is neither rising, nor falling. No higher highs and no lower lows. It means market is stuck and waiting for something. No wonder for what. ECB rate decision is expected to be released at 11:45 GMT. No surprise is expected. However, any slight hawkish or dovish comment can send the pair up to previous high of 1.1697 (24^th of August) or down to the low of 1.1151 (28^th of August low) and possibly much lower. Either scenario is possible, but downside is probably favored. Why?

ECB is not planning to raise interest rates any time soon. FED is contemplating rate hike and this puts Euro in a vulnerable position. It is probable that current run to 1.1700 level was simply profit taking on short positions in Euro and a healthy counter trend move that happens in any trending market. However, FED seems to be too slow in their decisions and this can affect short term fall of US dollar. So, any sign of bearish or bullish ECB comments will affect exchange rate of the pair dramatically. 

One other possible bullish sign for Euro is that price broke below important 1.1233 level yesterday during US session, but is going back above it now. 

Let’s wait for European Central Bank. 

Rate hike expectations are pushing Pound up

After correcting a little after a sharp rally that was cause by better than expected UK CPI data. It is obvious that expectations are high and unless proven otherwise we will probably see Pound rising versus US dollar in the meantime. 

However, two pieces of information that can rock the boat are coming today from US. US CPI (Consumer Price Index) and FED minutes are to be released during US session.

CPI is coming at 12:30 GMT and FED minutes at 18:00 GMT. These two may completely turn things around. Better than expected US CPI and bullish hawkish FED minutes will be taken as a sign that FED will start raising interest rates sooner than BOE. On the other hand, worse than expected data and dovish tone inside FED minutes will re-confirm that BOE is ahead of FED and US dollar will go down against British Pound. 

Pound is rising at the time of writing. If it turns around, there is plenty of support below. The first level is right at early European session lows: 1.5662. Key support is yesterday’s low at: 1.5644. 

I tend to think that the second level is not reached. On the other hand, resistance is right ahead at yesterday’s high: 1.5717.

Let’s wait and see what happens when US markets open and fundamental releases come out. 

Intra day support and resistance level on Pound/Dollar

Forex news

This is the second post on the topic of Forex. I want to discuss the second best topic on Foreign Exchange market and that is Forex news. This is the driver of most strong market moves that are inspired by fundamental news releases. Most people would advise you against trading fx events and they might be right. Newbie traders get burned when they try to capitalize on Forex volatility and enter the market that is inspired by this or that macroeconomic event. Old and experienced traders know what it is to have an open position and get burned when market turns against you and you are in a loss of thousands of pips.

You can go to any Forex provider, find economic calendar on their page and check what important news events are scheduled for the week. Some of the most famous websites to do that could be dailyfx, Forex factory, investing.com, fxstreet, myfxbook, forexyard or forexpeacearmy. Choose the one you like most, or two and each Sunday check what events are to be released on the coming week.

What are some of the most important Forex news releases? The first would be interest rate decision. Most central banks do it once a month or once in two months. This is the key to fundamental analysis in currency trading. Quite often these are followed by press conferences where central bankers share their view of economy. In most cases these post release events are even more important than the events themselves.

Consumer price index would be second, because it measures inflation in a country and as you know inflation is very much connected to increasing or cutting interest rates.

Producer price index comes next as it directly influence consumer price index and might be a generator of inflation.

Retail sales, although not so important it does create big market moves from time to time. Employment indicators are of high importance as they measure the health of employment sector and of global economy on the whole. Non Farm payrolls should be mentioned separately as it is the biggest driver in employment numbers. By the way, it is coming this Friday.

Other less important, because they create less volatility are: consumer confidence data, durable good orders, beige book and a few more. Some data has no influence to the markets at all.

So, next time you think about opening a trade look at the calendar if there are no economic releases scheduled in the horizon.