There is no FOMC meeting on Oct but European Central Bank’s(ECB) Interest Rate Decision is coming this week on 27 Oct 2022.
EURUSD has been below parity for a while. The market consensus for this round of ECB meetings is to raise 0.75% to bring the interest rate to 2%. This should have already been priced in the current market. However, any rate hike of higher than consense will make EURUSD bullish.
EURUSD Bullish Factors
- Europe’s Latest Inflation rate was 9.9%, although is less than the consensus of 10% but it is still higher than the previous month of 9.1%. If inflation keeps going up in Europe, that might cause ECB to have more rate hikes in an aggressive manner.
- Germany’s PPI MoM for Sep is 2.3% versus the consensus of 1.3%. PPI tends to be a leading indicator of inflation. Hence, there is a high probability that the inflation rate for Europe might still be going up.
- Last Friday, US Fed’s member Mary Daly release the first Dovish sign for the rate hike, indicating the rate hike for December and later can be 0.5% or 0.25% instead of 0.75%. Other than that, there is also more dovish signs from the statement from other US Fed member too.
EURUSD Bearish Factors
- More negative news on Nord Stream gas flow to Europe and any potential Energy shortage in Europe.
- The potential return of the European sovereign debt crisis is another factor to watch. The interest rate rise in the European zone will cause weaker European countries that have higher debt will need to repay their debt at a higher rate.
- More Hawkish comments from US Federal Reserve members.
We believe the direction of EURUSD is not clear at this moment.
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 this period starting from 26 Oct till 28 Oct. You can use the stop trading period feature in the EA to do that. You can also decide to extend the stop trading period (eg, till 29 Oct 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. You should assess your personal circumstances and perform your own research to make decisions for your trading.
