Despite surprise hike, EURUSD direction will rely on relative central bank aggressiveness

  • EURUSD
    (${instrument.percentChange}%)


Source: www.tradinview.com

Following the ECB's surprise 50bps hike yesterday, we look to the spread between the German-US 2-yr note with interest. We view this relationship as the market's interpretation of relative aggressiveness between the ECB and Fed. When the spread's momentum is firmly down (green shaded area), the EURUSD has weakened considerably. Therefore, we regard the stochastic's lower quintile as key in trend determination (red arrow). We now look to see if it resumes its position here. If so, parity comes into focus once again.

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

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