ECB Interest Rate Decision Could Spark a Reversal

ECB Interest Rate Decision Could Spark a Reversal

2023-07-27 • Updated

On Thursday, the European Central Bank is expected to hike interest rates by a quarter percentage point to 3.75%. After July, the certainty of further rate hikes is unclear, leading to a craving for guidance in financial markets. The ECB may turn more cautious in signaling future policy while confirming a data-dependent approach. Core inflation remains stubbornly high, and the impact of a weakening economy on policy is uncertain. Bank lending data suggests tightening financing conditions may lead to speculation that rates are close to peaking.

EURUSD - H4 Timeframe

EURUSDH4-2707.png

EURUSD, as seen from the chart, is trading within a drop-base-drop supply zone, with the intersection of the 50-period moving average. Though these aren’t exactly my premium kind of trade ideas, I believe the ‘rates’ decision from the ECB later today will go a long way to influence whether or not this ends up playing out according to the trade idea.

Analyst’s Expectations: 

Direction: Bearish

Target: 1.10867

Invalidation: 1.11528

EURAUD - D1 Timeframe

EURAUDDaily-2707.png

EURAUD is clearly trading inside a wedge pattern, with the most recent price action coming from the rejection at the trendline resistance. From here, this means that we can expect to see a continued drop in prices until it reaches the trendline support - my thoughts. I understand that the moving average threatens the further decline of price. Hence the need to watch out for the outcome of the ECB release patiently.

Analyst’s Expectations: 

Direction: Bearish

Target: 1.60888

Invalidation: 1.64472

EURCAD - D1 Timeframe

EURCADDaily-2707.png

EURCAD is on its way downwards, having gotten rejected from the resistance trendline. Currently, the price action doesn’t appear to be clear yet since there hasn’t really been a clear break of structure. My plan here, however, is to watch for a break and retest either of the trendlines, then position to trade in the direction of the breakout. In the meantime, I expect that we will see a continuation of the bearish movement soon.

Analyst’s Expectations: 

Direction: Bearish

Target: 1.44686

Invalidation: 1.48876

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

TRY TRADING NOW

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