EUR/USD: ECB Press Conference, A Major Determinant

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The European Central Bank Press Conference meeting is next week in Frankfurt, Germany to talk over and update the world on its monetary policy. It is among the most important economic events of the first half of this year and possibly the entire year. After much preparation and anticipation, the ECB is widely expected to take unconventional measures to counter the low inflation and risk of deflation. It may also announce fresh initiatives to help facilitate financing for small and medium sized businesses.


The ECB is scheduled to announce its latest monetary policy decision at 7:45 am ET on Thursday June 5.  That’ll be followed by a press conference with ECB President Mario Draghi slated for 8:30 am ET. Because growth has been sluggish and inflation has been low, market watchers will be looking for two major things from the ECB: a cut in interest rates and the signaling of an asset purchase program.


I will suggest most retail investors should stay out of the EURO at the early days of the trading week till the announcement. This will provide a great trading opportunity and over-all give us a clear direction where the single currency is heading. This event most times provide a long lasting trend of over a 100 pips depending on the outcome of the meeting, so its better to be patient.


However, we suspect the market is particularly vulnerable to “sell the rumor and buy the fact” activity. This may be counter-intuitive, but this is essentially what happened in the past. When the Fed announced QE, it was often well anticipated, and the dollar sold off until it was announced and then rallied.





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