ECB Rate Statement Strategy

Anybody already short EUR ahead of this week’s ECB rate statement? How do you think this economic event will play out?

Yeah, definitely shorting a few pairs this week.

It’s going to be interesting to see what they do, as Draghi has already announced this to the market a few weeks ago. It will be interesting to see how radical this will be.

Hmmm… I am hesitant, it’s just that the ECB are masters of fudge, everybody is clamouring for euro shorts, I was going to break my own Mon rule this morning and short at the 30, it fell short of that by a couple of pips so I’m happy.

I’ve seen it so many times in the past - think I’ll just sit awhile and watch :slight_smile:

German CPI came in low… Which means euro inflation will come in low… Which means ECB is going to cut. More then likely they will also initiate around 50 billion euro LTRO as well. Eurusd hits 1.3550 sometime between now and ECB meeting… And will spike lower at the rate cut announcement.

Yeah, either way it could really push euro pairs around. Seems like easing is pretty much priced in already though so if they disappoint, profit-taking could really do a number on the euro.

Masters of fudge, lol good one. Same here, I will most likely just sit and watch the actual event then try to see if there are any longer-term setups that I could take instead.

Yeah, that German CPI is gonna drag down the CPI forecasts for the entire region. Sellers are jumping in early though and this might be a “buy the rumor, sell the news” situation. Did you short already?

I did before the German CPI. Exited at 1.3595 … Now I have a stop sell right at 1.3585, next time it tests that level it will break down I am guessing. Also will short it if it gets back to 1.3620.

The euro may recover but it will have to spike down after the rate cut. Probably see it dip into the 1.34s briefly before “selling the fact” would start to occur.

The EURO has been consolidating (more or less correcting) for the last 7 days.
From a technical / longer-term standpoint, folks, we’re still in an uptrend here until 1.35 gets taken out.
Near-term, I’m looking to short a break of this congestion around 3583, targeting just above 3500.
We may see some buyers step @ 3500…If it looks like it’s going to fold, then surely position traders will unwind as that is a major pivot point (the most recent critical swing low, that printed the most recent critical swing high).

Up trend on the 4hr chart has been broken already.

Which is why I said I’m looking to short a break of that consolidation :slight_smile:

I fully agree with you. I’am also looking to go short below the 1.3585 level.

Lol, was just reading John Hardy’s (of Saxo) comment, he talks of the tail risks on Fibre and the fact that M Draghi could surprise the market yet again “not least by announcing less than people are expecting”.

He is also noting the muted reaction this morning, is it possible that the market has already applied some discount? is his question.

Poor old M Draghi, can it be true that nobody trusts him to do what has to be done?

In truth if he does the business, and it’s clearly needed, then BD’s spike could last right until NFP.

Fair point. It looks like it’s making a smaller reaction to the euro zone events, even with the weak German prelim CPI and euro zone inflation forecasts. Looks like easing is already priced in way before.

Well I did finally short at the 3630 - the reason I waited was for the momentum to be in the shorts’ favour, I seldom (almost never) trade thru a weekly pivot on a weekly trade (s1 at 3590), but this time I suspected that following a spike up price would have the momentum to go through.

There was another aspect to all of the shorting - the ECB like to keep us on tenterhooks all day, so we get the rate announcement, then in a while the speech and finally the q&a - all three are market moving.

Often the first item, the announcement, (never was going to be Euro Bullish) will provide the impetus for the push, the other two will give us plenty of volatility and more difficult to trade on a day basis but will set up the outlook for the longer term.

The upside of using momentum like I did is that it can be a little easier to configure a stop, the downside is that we don’t always get the spike, so no trade.

Lol, since I posted we have that volatility, imagine how to day trade that.

This is the ECB fudge in action, bring on NFP, hard to beat decent hard numbers :slight_smile:

Btw, this is also why when trading action like today it’s good to have a planned exit, again I often use the weekly pp, today I chickened and left just below the daily s2 - had I been brave (and greedy) then maybe the weekly s3 at 3507 … it’s called hindsight trading - absolutely perfect every time.