ECB rate decission preview
The European Central Bank is set to announce a restart of it's asset purchasing program and a rate cut of at least 10-bps. Overnight index swaps are currently pricing in a 100% chance of a 10-bps rate cut and a 46% chance of a 20-bps rate cut.Overall, there is a 78% chance of a 20-bps rate cut later today.
Reuters informed that 80% of the economists it polled are skeptical about the bank's ability to influence inflation over the medium term.
On Wednesday the Euro dropped 0.5% against the US Dollar ahead of today's interest rate policy decision. The question is if this highly anticipated rate cut is already priced in the market? And if so, should the stimulus package disappoint investors, would the Euro rally above 1.10 against the US Dollar?
Right now the EURUSD is trading around the 1.1025 almost flat for the day (+0.13%) in the midst of Mario Draghi's press conference. A rally above 1.11 would break the inmediate bear structure and could catapult the EURUSD to retest previous base around the 1.18/20 level. But a stimulus package, no matter its size, is bearish for the EURO so if the Euro rallies against the US Dollar on missed expectations it could be short lived and a good opportunity to sell the Euro at a better price.
Tradimo is an online education community that seeks to educate people in the field of online financial trading. Tradimo is not a broker and does not process, manage or hold any user funds. Tradimo carries advertising for regulated online brokers. Advertisements are clearly marked as such on the Tradimo website and are kept separate from Tradimo's editorial content. Each broker is solely responsible for the content of their advertisements. Tradimo does not endorse or vouch for its advertising partners. Tradimo is fully independent and is not tied to, or otherwise engaged in, any form of corporate partnership or joint venture with any of its advertisers. Tradimo is not responsible for, and does not take an active role in, any contractual relationship which may come into being between its users and its advertisers. Any disputes between Tradimo users and its advertisers should be resolved directly by the parties concerned, Tradimo is unable to provide any form of support or assistance in such matters. Tradimo does not act as a financial advisor and will not recommend its users to trade or invest in specific assets, nor recommend the services of any particular broker.
Tradimo teaches specific trading strategies and concepts. Those strategies and concepts are taught for educational purposes only and are not intended as, and should not be deemed to amount to, financial advice. tradimo has taken all reasonable steps to ensure that its educational materials and services have been created to comply with its own high quality standards, however Tradimo does not provide any guarantee as to the suitability, quality, fitness for purpose and/or success of its educational materials or services when applied to real money trading or investing. If you choose to apply what you have learned at Tradimo to real money trading or investing, you do so at your sole discretion and at your own risk.
Trading in financial instruments carries a high level of risk to your capital with the possibility of losing more than your initial investment. Trading in financial instruments may not be suitable for all investors, and is only intended for people over 18. Please ensure that you are fully aware of the risks involved and, if necessary, seek independent financial advice.