so i was just looking at how the EUR/USD reacts when the ECB announces intrest rate changes, as i missed last thursdays release and am full of regret about it.
these examples are all rate cuts. to draw conclusions from this very limeted set of data, i would say you might expect a 150-200 pip move following an announcment, with limited whipsawing.
0.5% to 0.25% most recent rate change (last thursday)
Rate cuts is considered somewhat a weakness in that currency. However it might serve well to build upon in order to anticipate moves but solely trading interest rate decisions is sort of trying to find an arbitrage and doesn’t go a long way.
The interest rate difference is the fuel of the market, that creates trades and ranging periods.Since the EUR and the USD interest rates are now so close to eachother, the EUR/USD is becoming consolidating.While if you check the AUD/JPY or other exotic pairs, you see that since the yen has a very little interest rate and the AUD has a big one, very nice swings can be seen, and it will never consolidate.
