ECB Interest Rate Decision Preparation

2022年10月27日The ECB is due to release its interest rate decision today 8:15pm (GMT+8)
The current market forecast is for a 75bps hike, taking the interest rate from 1.25% to 2.00%. This decision is likely to have been fully priced in.

The EURUSD had climbed to reach a high of 1.0095 on the back of the DXY weakness and possibly with markets anticipating the 75bps rate hike to come. Currently, the EURUSD is retracing as the DXY recovers by bouncing off the 109.50 price area.

In the lead-up to the news release, I'll be keen to see
1) a deeper retracement between 1.00 and 1.0040
2) price to stay above the parity level

That will allow for a buy-stop order at 1.0050, stop loss below parity and take profit towards the 1.019 60 resistance level, resulting in a 1:2 risk-reward trade setup. If the ECB disappoints, or if the price breaks lower on the release of the news, due to the priced in effect, then I'd cancel the order.

Remember that volatility in the EURUSD will have a significant impact on the DXY, which could affect all major currencies, especially in the short term.