EUR/USD Outlook Hinges on Updated ECB Forecast, QE Program Deadline

European Central Bank (ECB) to Stick to Zero-Interest Rate Policy (ZIRP).

Will a Governing Council Stick to a Dec Deadline Start to Taper a Asset-Purchase Program?

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Trading a News: European Central Bank (ECB) Interest Rate Decision

ECB Rate Decision

The initial greeting to a European Central Bank (ECB) seductiveness rate preference might be singular as President Mario Draghi and Co. safety a zero-interest rate process (ZIRP), though a uninformed updates entrance out of a executive bank might drag on EUR/USD if a Governing Council merely attempts to buy some-more time.

The ECB might mostly validate a wait-and-see proceed as ‘measures of underlying acceleration sojourn low and have nonetheless to uncover convincing signs of a pick-up,’ and a Euro might face a bearish greeting should a executive bank keep a doorway open to extend a quantitative easing (QE) module over a Dec deadline. On a other hand, a Governing Council might ready European households and businesses for a less-accommodative position as officials see ‘reflationary forces, that referred to a liberation of acceleration from levels next a long-term trend, had transposed risks of deflation,’ and a change in EUR/USD function might continue to reveal via a residue of a year if a ECB shows a incomparable eagerness to gradually pierce divided from a easing-cycle.

Impact that the ECB rate preference has had on EUR/USD during a prior meeting

July 2017 European Central Bank (ECB) Interest Rate Decision

EUR/USD 15-Minute

EUR/USD Chart

The European Central Bank (ECB) stranded to a zero-interest rate process (ZIRP) in July, though went onto contend a Governing Council will confirm a predestine of a quantitative easing (QE) module in autumn as a non-standard magnitude is scheduled to finish in December. The uninformed remarks advise President Mario Draghi and Co. will gradually pierce divided from a easing-cycle as ‘the risks surrounding a euro area enlargement opinion are broadly balanced,’ and a ECB might continue to alleviate a dovish tinge over a entrance months as officials disagree ‘reflation has transposed deflation.’ The Euro rallied following a ECB meeting, with EUR/USD clearing a 1.1500 hoop to finish a day during 1.1630.

How To Trade This Event Risk(Video)

Bearish EUR Trade: ECB Endorses Wait-and-See Approach

  • Need a red, five-minute candle following a press discussion to preference a brief EUR/USD trade.
  • If marketplace greeting favors a bearish Euro setup, sell EUR/USD with dual apart lots.
  • Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial aim is met, set reasonable limit.

Bullish EUR Trade: Governing Council Prepares to Taper QE Program

  • Need a green, five-minute EUR/USD candle to preference a prolonged Euro trade.
  • Carry out a same setup as a bearish Euro setup, only in a conflicting direction.

Potential Price Targets For The Release

EUR/USD Daily Chart

EUR/USD Daily Chart

Check out a EUR/USD quarterly projections in a FREE DailyFX Trading Forecasts

  • EUR/USD appears to be stranded in a near-term holding settlement as it pulls behind from a 2017-high (1.2070), though a broader opinion stays constructive as a bull-flag arrangement pans out, with a span stuffing a opening from January-2015 (1.2000 down to 1.1955).
  • The Relative Strength Index (RSI) highlights identical energetic as it preserves a bullish arrangement carried over from late-2016, though a oscillator appears to be devious with cost as it struggles pull into overbought territory.
  • Failure to exam a 1.2130 (50% retracement) jump might coax a incomparable pullback in EUR/USD, with a pierce next a 1.1770 (100% expansion) region opening adult a 1.1670 (50% retracement) support zone, that mostly lines adult with a August-low (1.1662).
  • Interim Resistance: 1.2320 (23.6% retracement) to 1.2370 (61.8% expansion)
  • Interim Support: 1.1390 (61.8% retracement) to 1.1400 (61.8% expansion)

EUR/USD Retail Sentiment

EUR/USD Retail Sentiment

Track Retail Sentiment with a New Gauge Developed by DailyFX Based on Trader Positioning

Retail merchant information shows 29.3% of traders are net-long EUR/USD with a ratio of traders brief to prolonged during 2.42 to 1. In fact, traders have remained net-short given April 18 when EUR/USD traded nearby 1.08642; cost has changed 9.7% aloft given then. The series of traders net-long is 13.7% reduce than yesterday and 2.2% reduce from final week, while a series of traders net-short is 4.3% aloft than yesterday and 1.6% reduce from final week.

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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