ECB officials hinting rate cuts- What it means for EUR/USD

“ECB officials said to see markets underestimating rate-cut odds”

EU (2)

The headline read “ECB officials said to see markets underestimating rate-cut odds”.  This headline coincided with the opening of the US stock market.  Stocks already moving lower into the open and continued moving lower after the open.  This was a double whammy for the EUR/USD as the ECB comments pushed the Euro lower and the move lower in stocks helped push the US Dollar higher (EUR/USD lower).

EUR/USD quickly moved lower on the ECB comments.  For the moment, the pair is holding recent support at 1.2050 as the market begins to price in a rate cut.  That level also confluences with the 38.2% Fibonacci retracement level from the November 4th, 2020 lows to the January 6th highs.  Below that, previous resistance near 1.2010 is the next level traders will be eyeing for support.  However, be aware that markets may slow ahead of the FOMC meeting later today.

Source: Tradingview, FOREX.com

Intraday resistance is now at 1.2108.

Source: Tradingview, FOREX.com

Although the ECB has indicated that they may be ready to cut rates, watch the FOMC meeting in a few hours to consider the US Dollar side of the equation and get a better picture for EUR/USD!

Learn more about forex trading opportunities.


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.