Midweek Pair Focus: EUR/USD

[column size=”1-2″ last=”0″ style=”1″] EURO
Euro news tomorrow will, without-a-doubt shake the markets. Considering last week, the EUR hit 2 year lows and later rose almost 350 pips, major volatility is inevitable Thursday. I think lack of news or, negative news, could crush the Euro to new lows. Will Draghi drag the Euro down with his lack of substance to his words or, will the ECB back up the powerful words released last Thursday? German Chancellor, Angela Merkel and French President, Hollande also have pledged their allegiance to the Euro-zone. A bullish long term Euro is possible! But, so is a very, very bearish Euro. The high hopes given by Draghi can turn into high “bears” if the ECB disappoints Thursday.

The Minimum Bid Rate will be released at 7:45am EST Thursday morning. The rate is the interest rate on the refinancing procedures that provide most of the liquidity to the European banking system. This rate is released monthly and it’s figures are determined by the executive board of the European Central Bank. It’s figures hit new lows in July dropping to .75% and it is expected to remain at .75% for August.

Forty-five minutes after the rates are released, the ECB Press Conference will start.

This monthly press conference is structured with two periods of time. The first period of time consists of the reading of a prepared statement. The second, opens the conference up to questions from the press.

The ECB Press Conference is less than 24 Hours away!

To stay up-to-date on the releases; here is a link for the webcasts of the ECB.

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[column size=”1-2″ last=”1″ style=”2″] U.S. DOLLAR
The FOMC (Federal Open Market Committee) Statement was released today. Initially bullish for the USD, we will see how the market settles down. With MAJOR news for the EUR (ECB Press Conference) and the USD, (Unemployment Claims, Non-Farms Friday) the remainder of this week looks like it will overflow with volatility.

Here is a a portion of the FOMC release from today: “The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

We will continue Operation Twist at least until the end of 2012. You know the saying, “No news is good news.” this is true when it comes to the QE outlook. No news of a QE3 is good for the USD. Today QE3 was not mentioned in the release.

All eyes on Mario Draghi for tomorrow. The ball is in the ECB’s court and we’ll see what they do with it. Negative news could shot the Euro down to new lows.

To read the FOMC release for today, click here to visit the Fed’s website.
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Written By: Tony College

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