This coming week will have US CPI and PPI announcements while from the Europe side, there will be an interest rate decision from European Central Bank(ECB). Let’s review EURUSD and have a game plan for this upcoming announcement.
Last week was an interesting week with some surprises from US Stock Market. Silicon Valley Bank (SVB), which is famous as a tech lender for many new tech startups suddenly collapses. This has been known to be the second largest bank failure in US history after Lehman Brothers. The impact of SVB’s failure has yet to be unfolded, but you can imagine, with the current economic environment, it is already hard for tech startups to raise capital through the stock market, losing their working capital in SVB could be the straw that broke the camel’s back.
On another side of the market, Silvergate Capital, a central lender to the crypto industry, said on 8 March 2023 that it’s winding down operations and liquidating its bank. Silvergate is one of the two main banks for crypto companies and the Crypto market has tumbled due to this news.
All these might seem not related to EURUSD on the surface but there are actually interrelated. One of the reasons for SVB’s collapse is because of raising interest rate by US Federal Reserve. The raising interest rate has caused the bond price to fall and SVB invested heavily in US Government Bond.
EURUSD Bullish Factors
- Last Week, Europe’s Inflation rate has showed signs of coming back. For YoY Inflation Rate for Feb, the consensus is 8.2%, but the actual was 8.5%, which is just dropping 0.1% from 8.6% for Jan YoY. The inflation rate for some Europe countries like France, Spain, and Germany increased for Feb, which has confirmed the rebound of inflation in the Europe zone. ECB might need to raise interest at a faster rate to control inflation.
EURUSD Bearish Factor
- The US will announce its CPI on Tuesday and if the CPI is higher than the consensus of 6.0%, then USD most likely will go strong as it confirms the rebound of CPI.
- The US will announce its PPI on Wednesday and if the PPI is higher than the consensus, then it again confirms the rebound of inflation as PPI is always the leading indicator for CPI.
- In the last few weeks, more and more US Fed members provided hawkish’s views on interest rate hikes and Powell also confirmed last week the ultimate interest rate will be higher and will stay longer too. More Fed members’ speeches with hawkish’s views will make USD strong.
- In the Daily chart, EURUSD has just rebounded from the uptrend channel at the moment. However, the breaking down of this channel will lead to the end of this EURUSD rally will move downward.
Recommendation
With this outlook, and to be on the safe side, we strongly recommend all Ophiuchus and Limitless EA users to schedule to stop trading for the ECB Interest Rate announcement starting from 16 Mar till 18 Mar. You can use the stop trading period feature in the EA to do that. You can also decide to start the stop trading period earlier to avoid the volatility of the US CPI announcement too (eg, from 14 Mar and only start trade on the week after next) if you would like.
Disclaimer – Please note that Limitless Trading is not liable for our recommendation and is not responsible for any loss or profit caused by this recommendation. This is general advice without considering your personal circumstances. You should assess your personal circumstances and perform your own research to make decisions for your trading.
