The EUR/USD fell away sharply last week, before staging a rebound on the QE talk. I’m looking to enter at key support at 1.1746 with a stop loss at 1.1650 and a profit target of 1.1937.
Entry Point: 1.1746
Stop Loss: 1.1650
Take Profit: 1.1937
EUR/USD 240 min Chart - EUR/USD is On the Up
Is this the end of QE?
The weekend has been full of geopolitical headlines, led mainly by US President Donald Trump and the trade war saga that continues to bubble away. The G7 turned into a bit of a mess and Trump remained strong on his plans to impose tariffs on those countries that do the same to the US.
This week the real focus will be on the ECB and what is in store for QE. Last week, a report suggested that it would be the June policy meeting that would be the line in the sand for the ECB’s bond purchase program. And sure enough only days later an ECB economist confirmed as much.
The reports suggest that the ECB will wind down QE by years end. Paving the way for potential rate rises to come in the future. So much of the attention will now fall on the ECB policy statement and Mario Draghi’s press conference.
Key Economic Data
We are also going to be hearing from the FOMC this week, regarding their interest rates. The situation is that economists are predicting yet another rate hike under new boss Jerome Powell. That will take rates up to 2.0% in the US, which is getting back to what might be considered normal interest rate levels.
At the same time, we will also be getting CPI readings out of both the Eurozone and the US. CPI is really the major benchmark that central banks use. As it is their main job to keep inflation in check and at levels they target.
This weeks CPI figures might be too late to change the result of the central bank meetings, but they are market moving events nevertheless.
The EUR/USD is currently in a range between 1.1750 and 1.1800. If we do in fact get a change in QE then I would expect to see a strong rally up to the 1.2000 level. Conversely if they push the announcement back to July then I think markets will be disappointed and even frustrated.
We will need to tread carefully this week as we are effectively being forced to bet on the outcome of the ECB’s policy meeting. Which as we have learnt are often hard to predict.
EUR/USD - Key Levels
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