EUR/USD; EUR/GBP: a risk the ECB may move rates up another 25bps
Money markets are currently pricing in a 70% chance that the European Central Bank (ECB) will not move rates, but could there be a risk trade here?
Richard Snow, from Daily FX, tell IGTV’s Jeremy Naylor he believes there is an under appreciation of the risks that the ECB goes up again. He looks at EUR/USD and EUR/GBP.
(Video summary)
This video dives into the upcoming interest rate decision by the European Central Bank (ECB) and how it could impact the market.
There's a bit of uncertainty surrounding this decision, with some experts thinking that interest rates shouldn't change, while others believe there might be a small increase.
What potential role does Germany play in influencing the ECB's interest rate decision for political reasons?
Richard Snow from Daily FX sheds some light on what could happen. Snow thinks there's a chance of a rate hike, thanks to inflation trends and commodity prices. He mentions the possibility of Germany trying to influence the decision for political reasons.
It's important to note that the ECB's main focus is keeping prices stable, not just worrying about jobs and economic growth.
How might the interest rate decision impact trading strategies?
Now let's talk about how this decision could affect trading strategies. Snow explains that the dollar has been losing value lately, but if interest rates go up, we might see a temporary pullback in the EUR/USD pair. Snow predicts that there'll likely be a long-term downward trend, but in the short-term, the euro could rise a bit.
What trading setup potential does the video hint at for the euro against sterling?
The video also briefly touches on the EUR/GBP, hinting at the potential for a trade setup that sticks within a certain range.
Overall, Snow stresses that there's a lot of uncertainty surrounding the ECB's upcoming interest rate decision. The video gives us a peek into possible trading strategies depending on what happens. He also mentions that the ECB cares most about keeping prices steady and takes into account various factors when making their decision.
So, if you're new to trading, it might be a good idea to keep an eye on the ECB and consider these insights when developing your strategies.
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