It’s gonna be a busy day for European traders with the BOE, ECB, and SNB publishing monetary policy decisions today!
Traders are slightly more interested in what the ECB will have to say though.
How will EUR/USD react to today’s headlines?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/USD’s uptrend pullback ahead of the FOMC policy decision. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
EIA: U.S. crude stocks soar by more than 10 mln barrels (vs. 3.6 mln barrel drop expected)
Fed raised rates by 50 bps to 4.25% – 4.50% range as expected
Fed dot plot now sees “terminal rate” at 5.1% in 2023, no rate cut until 2024
Powell: “some ways to go” on rates, will take “substantially more evidence” to convince Fed that inflation is on a sustained downward path
Elon Musk sells chunk of Tesla shares worth $3.6B
NZ GDP up by 2.0% q/q in Q3 (vs. 0.9% expected, 1.9% uptick in Q2) as borders fully reopened
Japan’s November trade deficit soars from 973B JPY to 2.03T JPY on weak yen, high oil prices
Australia’s MI consumer inflation expectations lower from 6.0% to 5.2% in December
Australia’s unemployment rate remains at 3.4% in November as 64,000 new jobs added
China’s COVID and property sector weakness caused disappointing business and consumer activities data (industrial output, fixed asset investment, retail sales) in November
Swiss central bank hikes interest rates by 50 basis points to counter ‘further spread of inflation’
SNB’s presser at 9:00 am GMT
BOE’s policy decision at 12:00 pm GMT
ECB’s interest rate announcement at 1:15 pm GMT
US retail sales at 1:30 pm GMT
US Philly Fed manufacturing index at 1:30 pm GMT
US initial jobless claims at 1:30 pm GMT
ECB’s presser at 1:45 pm GMT
AU manufacturing and services PMIs at 10:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ? ?️
What to Watch: EUR/USD
FOMC members have said their piece and now it’s European Central Bank (ECB)’s turn under the spotlight!
Traders mostly expect the central bank to match the Fed’s 50-bps interest rate increase to 2.00% after two consecutive 75bps rate hikes.
Take note that ECB will also publish new economic projections.
We could see lower inflation estimates which may be used to justify a slower pace of tightening. Meanwhile, lower growth projections would mean a technical recession for the region.
A less hawkish policy decision or gloomy outlook from ECB could weigh on EUR/USD. As you can see, the pair is already approaching a key trend line support after hitting resistance at the 1.0700 psychological handle.
If today’s events don’t affect the dollar’s intraweek trends, though, then EUR/USD could return to its weeks-long uptrend.
EUR/USD could find support from the 50% or 38.2% Fibonacci retracement or even make new highs before the week ends.
