Interest rates may be the name of the game this week as major central banks release their decisions while others print more deets on their previous announcements.
ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!
Which calendar events will be under the spotlight and what are markets expecting? Here’s a list:
Major Economic Events:
RBA policy statement (Apr 5, 4:30 am GMT) – As expected, the Reserve Bank of Australia (RBA) kept its cash rate unchanged at a record low of 0.1% for the 15th month in a row in March.
RBA named Ukraine as a new source of uncertainty, along with energy and supply concerns. It also said that it won’t raise its rates until “actual” inflation stays within its 2% – 3% range.
AUD dropped across the board and made new intraday lows against its counterparts before higher commodity prices pushed it higher by the end of the Asian session.
This week, markets expect RBA maintain its interest rates but also turn a bit more hawkish as it considers inflation concerns and Australia’s strengthening economy.
FOMC meeting minutes (Apr 6, 6:00 pm GMT) – Two weeks ago, Fed members raised their interest rates for the first time in three years. More importantly, they signaled that there will be more to come AND that they could start reducing their balance sheets as soon as May.
Since then, some members have hinted at a 50-basis point hike in May while others are solidifying the balance sheet schedule. We’ll know more from the March meeting minutes scheduled this week.
ECB monetary policy meeting accounts (Apr 7, 11:30 am GMT) – The European Central Bank (ECB) turned surprisingly hawkish last month, not only dropping its hints of taking its rates further into negative territory but also announcing that it could end its Asset Purchase Programme (APP) in Q3. Markets had only priced in the Pandemic Emergency Purchase Programme (PEPP) ending in March!
The meeting minutes could provide details on just how hawkish ECB members have turned, and give clues on the central bank’s interest rate hike schedule.
Forex Setup of the Week: EUR/USD
EUR/USD Daily Forex Chart
Euro traders are in for some action as we find out how much hawkish ECB members have turned during their March meeting.
Before you buy EUR like it’s the latest airfryer, though, you should note that any EUR strength against USD will play against EUR/USD’s downtrend on the daily.
Lack of resolution in Ukraine would also limit the euro’s gains this week. And then there’s the Fed’s meeting minutes, which should highlight the central bank’s aggressive tightening schedule and maybe push USD higher across the board.
The pair has room to climb as it flirts with the bottom of a month-long uptrend but its gains could quickly find resistance from a trend line and 100 SMA levels on the chart.
Shorter-term traders can take advantage of March’s uptrend and look for buy opportunities around the 1.1000 ascending channel support.
If you’d rather trade EUR/USD’s longer-term downtrend, then you can wait for EUR/USD to climb closer to the daily chart’s resistance zones before executing sell orders.
