ECB expected to cut interest rates tomorrow

Foreign Exchange Technical Analyst Outlook : The move in the Canadian dollar is starting to look like a reversal move, even though we don’t have a moving average crossover (which lags). Momentum, breaking the old low and other indications all point to a foray to the channel bottom, if not beyond. The upmove in the Australian Dollar is similarly strong. Remember, for reasons nobody understands, the Australian Dollar often leads the euro so soon you can see foreign exchange traders buy euros. If we were to superimpose a chart of oil and/or the commodity index on the Australian Dollar, we’d probably see a pretty good apparent correlation.

On the euros to dollars chart, we are going to fall back on the old adage that it’s still a downtrend until a key level is taken out. We judge that to be 1.3102, the midpoint of the breakout bar on 10/30, and the highest high in the current swing, 1.3298. With the ECB expected to cut interest rates tomorrow, this seems unlikely unless the market perversely rewards the ECB for doing the right thing economically. The probability is not zero - see the Australian Dollar again. We also have a really bad US payrolls number due on Friday.

Is it already priced in?

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Barbara Rockefeller
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