A heavy schedule of news event is expected to be released this upcoming week. Fundamental and news traders can expect another week full of action, whereas technical traders will probably be less excited about the high impact statements and figures. Whatever your preference is, it will be wise to prepare yourself for a busy week ahead especially when considering the aftermath of the Swiss National Bank’s (SNB) statement last week.
EURCHF AGAIN TARGET THIS WEEK?
The Swiss National Bank’s (SNB) decision to remove the peg on the EURCHF created chaos, liquidity problems, and enormous volatility last week. The SNB intervention in the market to keep the EURCHF at 1.20 meant that the EURCHF price level was unnaturally quiet and flat for 3 years–until the market forces were unleashed when the SNB stepped aside.
This upcoming week the EURCHF will again be a target for heavy volatility. This time around, it’s not due from a decision from SNB but from a different bank: the European Central Bank (ECB). As a Forex trader it is important to be fully prepared for these events–read more here.
ECB DECIDES ON QE
The ECB will be making a decision whether to expand a Quantitative Easing (QE) program this week. The Euro zone’s economic struggles have only intensified in the last few years, even though the U.S. economy is showing signs of improvement and the FED has ended its QE 3 program.
The ECB’s lowering of the interest rate to near a 0% level has not yet yielded much effect. Many leaders and countries are therefore in favor of introducing the QE to help the struggling economies of Italy, Spain, and others. The main opponent is Germany, which has its reservations of adding too many Euros to the system (which is QE).
Traders should expect the bearish pressure on the Euro to continue strongly when the ECB gives the green light for an increase of QE. The EURUSD should continue heavily with its downtrend and price could accelerate even below 1.10 (as expected earlier). If the QE is not implemented then a temporary and small Euro rally could be seen. But there is a high chance that any bullishness will short lived and only part of a bigger EURUSD consolidation around current price levels of 1.15-1.17.
BOE VOTES & CAD RATE
Although less important than the ECB decision on QE, the other 2 major events are from Great Britain and Canada. The Bank of England (BOE) will show whether the vote count has changed compared to last time and the Bank of Canada will announce its interest rate decision.
Primarily the BOE vote counts will be an interesting event to monitor. The main question of interest is whether one of its conservative members will change their minds and join the majority. At the moment two out of nine members are in favor of a rate hike, whereas the other seven are in favor of keeping the 0.5% rate. If one of the two opponents joins the majority, then the likelihood of a rate hike will be pushed even further into the future.
Other important events this week are the bank holiday in the US on Monday, German ZEW economic sentiment on Tuesday, a potential monetary statement from the Bank of Japan Tuesday, and retail sales of Great Britain on Friday.
What do you think the chances are of the ECB introducing another round of QE?
Let us know down below!
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