The OPEC meeting and the US Nonfarm Payrolls rocked the market last week. The market is torn between optimism about the global economic recovery and concerns about the new coronavirus strains.
The market is awaiting the ECB statement
Due to the recent headlines and dovish comments by the ECB president Mario Draghi, there is a 50/50 chance of a rate cut. Some of the analysts suggest that the policymakers will wait for more data before cutting the interest rate. However, according to others, the ECB president Mario Draghi may surprise the market (as he can), and cut the interest rate today. Let’s see how many doves have been adding pressure to the market. Can we see any hawk out there?
Voices for hawks:
- Higher-than-expected European CPI (1.3% vs 1.2% expected).
Voices for doves:
- Lower-than-expected PMIs, PPI.
- Comments by the ECB president Mario Draghi on the further easing;
- Global uncertainties, including trade tensions.
- Dovish Fed.
Thus, if Mario Draghi is dovish and even cuts the interest rate, the EUR may fall lower. On the other hand, in case of the supportive comments by the ECB president, the EUR will rise.
What pairs to trade?
Pay attention to EUR/USD, EUR/JPY and EUR/CHF pairs. All of the pairs are trading near the old support levels of 2017. The dovish statement of the ECB may help them to continue moving within the downtrend.
If you are a bull, look at the EUR/AUD pair. After the dovish comments by the RBA governor today, this is one of the euro pairs which is rising. If the EUR is supported today, the pair will rise significantly. Otherwise, the slide will be inevitable.
The main bank of Russian will likely turn hawkish today. Time to sell USD/RUB?
Once in a month, the euro has a very special day of increased volatility at the start of the European trading session.
The US dollar is heading to close the seventh day in the red as it remains under selling pressure. The US data at 15:30 GMT+3 (jobless claims and Philly Fed Manufacturing Index) may support the greenback if it's strong.
Canada will publish the Retail Sales and Core Retail Sales on October 22, at 15:30 MT time (GMT+3).
The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).