Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

The vast majority of retail client accounts lose money when trading CFDs.
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Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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How to Trade EURUSD with Upcoming ECB Rate Hike

EURUSD posted a bullish week, which may fuel the single currency ahead of Thursday's expected ECB rate hike. 

Based on recent comments from officials, markets expect a 75 basis points increase by the ECB. 

EURUSD – Weekly Chart

eurusd weekly chart

The EURUSD pair has key targets ahead at the 1.02 and the 1.04 levels on the weekly chart, which can be a guide for traders this week. We can see a long-term descending support line in the play, hinting that recovery is due in the euro.

The ECB has been slower than other countries with its rate hikes but acted with its first increase in over a decade back in July. President Christine Lagarde and other officials hiked by 75 basis points at the most recent ECB meeting in September, with upgraded inflation forecasts of 8.1% this year and 5.5% in 2023. 

Markets are anticipating the same 0.75% increase to 2%, which would be the highest since the financial crisis of 2008-09. However, German inflation has topped 10% recently, and the EU's headline rate has also doubled. Policymakers have been increasingly vocal about this and stressed a need for higher rates.

The ECB said it expects to continue raising rates at subsequent meetings, but likely at a slower pace than the Fed. That sounds good, but the Federal has seen inflation move lower with its efforts, and the ECB cannot sit still. Several governing council members have even said they should move the interest rate to 3%. 

If the ECB increases by another 75bps this week, it could negatively affect countries like Italy. Rising debt servicing costs were a significant factor in the recent financial turmoil experienced by the United Kingdom.

Higher interest rates will also be a headwind for a region heading for recession, with the former powerhouse Germany a leader of negative GDP trends. The ECB is expected to hike by 75 bps, but traders should be alert for the press conference and hints that there is more to come.

Last Updated: 24/10/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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