How did the ECB puzzle investors? Details from the Forex Academy
During my time as a trader, I have repeatedly observed this situation: a novice comes to Forex, completely unaware of the market and not paying attention to the world news. As a result – drain and spent nerves. What is the main mistake?
Hello, traders! My name is Jan Sikorsky. I am a Forex Academy trader.
As I mentioned above – not all traders attach great importance to the world news that comes out every week, thinking that it plays a secondary role. But only this news can depend on all your earnings and ignore them should not in any case.
Therefore, according to tradition, We will sum up the results of the past week, find out what world news has shaken the foreign exchange market and make a plan for the next week.
The main event of the past week was the last meeting of the ECB this year. It decided the fate of the QE (quantitative easing) program - a program that involves the purchase of bonds of EU member States by the European Central Bank. The QE program was extended until December 2017, while the ECB will buy bonds for 80 billion euros a month until March, and 60 billion euros from April.
But the most important thing is the rhetoric that Mario Draghi used at the press conference. The key phrase was that, if the Outlook worsens, the ECB will deliberately increase the asset purchase program. This phrase made it clear that in the coming year, the ECB will adopt a more lenient monetary policy in comparison with the fed. On the back of these statements, the European currency fell to its key support around 1.0530.As for the fed, it is certain that the interest rate will be raised by 25 basis points this Wednesday. Today, there is every reason to assume that the fed will start a cycle of raising interest rates, so the dollar will strengthen against the Euro in the next year. And if the key support breaks through around 1.0530, we will most likely see parity between the European and American currencies.