All Eyes On The ECB Rate Cut
The Bank of Canada cut interest rates from 5% to 4.75% with the result of an appreciation of the U.S. dollar against the Canadian dollar and thus, a rise of the USD/CAD pair.
Today, all eyes will turn to the European Central Bank decision at 12:15 GMT. The ECB press conference is 30 minutes later.
ECB President Christine Lagarde is expected to announce a 25bp interest rate cut after rates have been held at a peak of 4 percent for nine months. The euro would naturally weaken in this case but since the move is largely priced in, for the euro to weaken further, it would need a ‘dovish cut’ with a hint at a second cut at the July meeting. In case of a ‘hawkish cut’, meaning that the ECB provides no further clues on future rate cuts and timing, the euro could be due for further upside. In any case, there is potential for heightened volatility today, which is why traders brace for some profitable swings.
EUR/USD
Looking at the weekly chart, we see that the pair is still captured within an overall lasting sideways trend with no markable breakouts. Breaking above 1.09 could lead to a test of the 1.0950-resistance area. The 200-EMA oscillates currently at 1.0973 (blue line), providing another crucial resistance. On the downside, the 1.08-support remains crucial and we recommend traders to wait for a break below 1.0760 in order to sell with the bears.
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Our trading ideas for today 6/6/24:
EUR/USD
Long @ 1.0915
Short @ 1.0830
Settings today: Entries from 8:00 am UTC, SL 25, TP 40-50
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
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