Market Spotlight: EURJPY Key Levels to Watch into Today's ECB Meeting
ECB in Focus Today
Traders are bracing for the headline event of the week today,with the July ECB meeting due. The market is widely expecting the bank to hikerates by at least .25% today, in line with the bank’s own guidance. However,soaring inflation and hawkish commentary from some within the ECB, is fuellinga split in expectations with some portions of the market now expecting the bankto hike by a larger .5%.
Given these hawkish expectations, the stage is set for plenty ofvolatility today. If the ECB opts for the smaller option, bulls might well be disappointed,especially given recent EUR strength, leading to a pullback in the Euro.However, if the bank opts for the larger hike, the reaction will likely be afirmer EUR although the bigger focus is going to be on the bank’s forwardguidance. If the bank is seen sounding firmly hawkish, indicating further hikesto come this year – signalling a larger hike in September perhaps, then thisshould keep EUR supported. The only risk is with regard to how cautious thebank sounds on the potential economic impact and recession risks into year-end.
Where to Trade the ECB Meeting?
EURJPY
This pair is in a very interesting position. Following the downsidebreak of the bull channel, price has since traded back up to retest the brokenchannel. Price is now sitting in the middle of the recent 140.82 – 143.80range. Today’s ECB meeting might prove the catalyst for a directional movethrough either of those limits, with a topside break targeting 149.83 and adownside break targeting 133.14.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.