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Forex: EUR awaits ECB frozen near 1.2850

FXstreet.com (Barcelona) - The Euro found a compromise between 1.28 and 1.2850 so far this week, as traders have been largely sidelined ahead of today's big risk event in the form of the European Central Bank Monetary Policy announcement.

This week, while headlines out of Europe were less than meet the eye for the interest of the shared-currency, the exchange rate has managed to stabilize somewhat higher.

In between some short-lived price shakes were observed on weaker PMIs in Europe, the resignaton of Cyprus Finance Minister, yesterday's soft ADP data and ISM Non-Manufacturing, Fed's members comments, all events within the context of secondary triggers not enough to move the pair from its semi-stagnation, a typical behaviour ahead of Cental Bank decision.

"Market expects the EU central bank to present a far more dovish stance than last month, when Cyprus was not part of the crisis history" says Valeria Bednarik, chief analyst at Fxstreet.com. Although a cut rate seems still out of question, a view agreed by Fxstreet.com contributors too.

Katarzyna Komorowska, fundamental expert at Fxstreet.com, presents varies views from our contributors below.

"ECB Chairman Mario Draghi failed to give any hints of further easing at the last meeting, and I believe this to be telling," states Nicky Ong, Co-Founder of Traders Corner, although he suggests that the central bank may cut soon but not yet in April.

Alistair Cotton, Senior Analyst at Currencies Direct, thinks that "the ECB will look to extend more liquidity to the banking system as a whole rather than cutting rates at this stage, which in his opinion would just be a 'symbolic' move.”

"The possibility of implementing new tools is low, as OTM is still in place, and in fact, has not been used yet. Acknowledge the area damage with dignity is the most the ECB can do this month" Valeria notes.

From a technical perspective, Chris Capre, founder at 2nd Skies Forex still looks for a sell setup towards the daily 20ema, "currently clocking in at 1.2921, and possibly to add some more shorts around 1.2966 to rejoin the downtrend" he says. Downside targets are set at 1.2750 and 1.2675, with a close above 1.3050 required to erase the bearish bias, he adds.

Valeria says that the pair remains bearish in the long ride, "and recoveries are seen as selling opportunities, as high as 1.2950 this Thursday, with a break below 1.2790 anticipating a return of the bears with 1.2720 then at sight" she adds.

Forex Flash: Today’s Aussie data reduces pressure on RBA to cut again – NAB

With today's +1.3% monthly increase in February for retail sales in Australia, best figure since early 2010, and first time since 2007 that it comes above 1% for second consecutive month, along with good numbers in the Building approvals front, “today’s data provides more comfort to the RBA that earlier rate cuts are translating into stronger activity,” notes Spiros Papadopoulos, Senior Economist at the National Australia Bank.
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