Jun 06, 2019
Trade the EUR on the ECB Rate Decision
All eyes are on the European Central Bank (ECB) today, which is expected to publish its interest rate decision at 11:45 GMT, followed by a press conference at 12:30 GMT.
Interest rate decisions by central banks are an important event in the financial space as these decisions impact the relevant currencies. In general, when rates are higher, it creates a demand for the currency, thereby pushing its value higher, and vice versa.
Interestingly, the current interest rate in the EU is 0% and, in some parts of the European Union, the interest rates are negative. While there is no expectation for any changes today, analysts are focusing on the forecast for the rest of 2019. As a result, they will pay close attention to words used during the press conference, such as interest rates and inflation. The current market expectations for the future is that inflation and interest rates are likely to drop in the next few months and if the central bank hints that this will not happen, it will push the euro (EUR) higher. The currency pairs to trade based on the ECB rate decision are the EUR/USD and the EUR/JPY.
To put it into perspective, in other countries, such as the US, Australia, Japan and India, the central banks have either already cut their interest rates or are about to. With this in mind, the big question is, will the ECB make the same move and will this push the EUR higher?