Last week, European Central Bank (ECB) raised the interest rate by 0.75% as per expected but Canada’s Central Bank, which is just next to the United States surprisingly raised its interest rate by 0.5% only, against the consensus of 0.75%. What will FOMC do in this coming Interest Rate Decision on 2 Nov 2022?
EURUSD has been above parity for 2 days and then back to below parity again. The market consensus for this round of FOMC interest rate decisions is to raise 0.75% to bring the interest rate to 4%. With Canada’s only raising the lower-than-expected rate of 0.5%, there are probabilities that FOMC might follow (although is not high) or they might indicate they will slow down the rate hike in the December FOMC interest rate decision. Any news on slowing down interest rate hikes will make EURUSD bullish.
EURUSD Bullish Factors
- Europe CPI will be announced tonight (31 Oct). The consensus now is 10.2%. If it came out higher than the consensus, EURUSD might be bullish as it also indicates they might need to be more aggressive with the rate hike.
- Recently, the tone of some US Fed members has turned dovish. More dovish statements to slowdown rate hike might make EURUSD bullish 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.
- US GDP returns to growth for the last quarter. This means that the US economy is still very hot. More Hawkish comments from US Federal Reserve members also will make EURUSD bearish again.
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 1 Nov till 3 Nov . 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 6 Nov 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.
