Some think he’s a downright Scrooge while others may call him a benevolent Santa. Whether you love him or hate him, when Mario Draghi, President of the ECB (European Central Bank) speaks, the world listens.
On December 3rd Draghi delivered a major policy decision speech. It revealed that the ECB pushed its deposit rate further into negative territory by reducing it by ten basis points to -0.3%. Major refinancing operations rate and the marginal lending facility rate were not altered, remaining at 0.05% and 0.3%, respectively. In addition, the ECB extended its asset purchase program under which it purchases bonds worth 60 billion euros every month, to March 2017 from September 2016, which isn’t exactly a hard deadline. Those don’t really exist in the Central Banker’s world.
Mario’s speech last week sent currency markets askew. The US Dollar was hit hard by Draghi’s comments for sure. Forex traders still want to keep finding profitable opportunities, though. So what should you expect going forward?
On the fundamental side, this is a balancing act between two central banks (FOMC and ECB) propping the Euro up for its inevitable next decline. While last Thursday’s move was violent, the markets have leveled off since. The US Dollar has also stabilized.
With the big fundamental play behind us, traders need to find the right time to jump back into the dollar. But here’s where things get tricky.
[bctt tweet=”#Traders fail to spot the technical trend changes when using lagging technical indicators.” username=”markettech”]
Those that are utilizing leading indicators, like those found in VantagePoint, are at an advantage. Trend forecasting capabilities give traders the confidence to enter a currency market after it’s made a big move. Whether it’s a counter-trend reversal or a further confirmation, traders utilizing technology that forecasts markets with up to 87.4% accuracy are prepared for these types of events.
