Risk event of the week starting Monday 25 July: US rate decision
With the long term weakness in EUR/USD, Richard Snow from Daily FX picks up on the trend and is looking for a better price to enter another short trade around US interest rates.
(Video Transcript)
Welcome, let's take a look now at a Risk Event for the week starting Monday 25th July. As we go into that last full trading week of the month, we can catch up now with Richard Snow from DailyFX with a look ahead to that event next week. Rich, how are you doing? What's going on? What's on your horizon?
Hi Jeremy.
I'm looking at a short EUR/USD trade, particularly short term, something intraday or scalping, around the FOMC rate decision next week, Wednesday. The euro is still in a bit of trouble. Major risks to the region considering you have to look at the gas flows continuing between Nord Stream 1. Those are at lower levels than expected. We've also had widespread rejection after an EU proposal for member states to consume 15% less gas.
That continues to be a dark cloud over the eurozone and the euro. We obviously had the resignation of Italy's prime minister Mario Draghi, triggering snap elections to be held in September. And then we had the ECB rate decision yesterday, which actually was a positive on the grand scheme of things. And we saw that 50-basis point surprise and the introduction of the ECB's anti-fragmentation tool in the bond market to go along with it.
Looking at the US, a fairly different story. We've seen that markets are expecting a 75-basis point hike on Wednesday. I don't anticipate that that will see a surge in the dollar but will certainly remain supportive of the dollar. So, looking at the chart, I'm looking at that particular area of resistance, that $1.0280 level. We've seen a push towards that without breaking above.
So I'd be looking at another test of that level in the lead up to the FOMC decision whereupon we can look to fade such a move. We've been seeing a daily range of around 100 pips so, if you are to see a rejection of that $1.0280, perhaps looking at entries from $1.0250, going short, looking at about 100 pips, setting a stop around about $1.03 and look to fade that move.
There are multiple levels to the downside that you can look at. Longer term play, you'd be looking at parity, but as I mentioned, I'd be looking to to fade this one in a very short time frame going in to next week. Interesting. Thanks very much indeed, Rich. Looking there for a better price to get in to go short on the euro-dollar around the FOMC decision on Wednesday.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
