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EUR/USD is just hanging onto 1.3600 at the moment and uncertainty around how the meeting will play out is keeping several traders at bay. I feel there are two potential scenarios that could play out for the pair, both of which involve going short at some point.
The first announcement from the meeting will be at 21.45 AEST when we get the minimum bid rate. Then at 10.30pm AEST will be the ECB conference where any unconventional measures will be announced, if in fact it is planning on delivering them. Should we see a spike in EUR/USD on the back of the announcement, then traders could look to sell at higher levels closer to 1.37. The 200-day moving average comes in just short of 1.3700 and I feel it’ll present some resistance.
Alternatively there could be a momentum play on a drop below 1.358 which has been the bottom end of the recent range in past weeks. If this level is broken, the first key level of support is down at 1.3500. While momentum is firmly to the downside, I would be cautious about holding onto shorts for too long as the pair is also fast approaching oversold territory. Trades will have to be quite hands on though given price action is likely to be extremely choppy.