CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Market alert: Will central banks move markets on Wednesday?

10:18 9 April 2019

This Wednesday will be crucial for the markets and especially for EURUSD and DE30 as traders await messages from the two most important central banks: the Fed and the ECB. In this analysis, we outline what to expect and present the current situation on EURUSD and DE30 charts.  

Summary:

  • The ECB under pressure to deliver more
  • Has the Fed discussed interest rate cuts?
  • A double bottom formation on EURUSD chart
  • Evening star on DE30 but the trend is strong

Will the ECB need to return to the QE (quantitative easing)?

Just a few months ago the ECB discussed future rate increases and now it has announced a lending program for banks (called TLTRO3) because the economy is in trouble again! This program might not be enough and some have already started speculating about a return of the QE. In our view, the ECB will try to stick to its view that economic problems are temporary and will try to postpone any further measures for as long as it can. However, Draghi will face many difficult questions so the post-meeting conference will be very interesting (start: Wednesday, 1:30pm BST).

What will the FOMC minutes show?

The Federal Reserve had a clear message at its last meeting in March – no more interest rate hikes this year. This helped stock markets but the dollar remained fairly strong as the situation in Europe seems more difficult. The minutes will show a detailed discussion from that meeting. When we look at Fed futures, markets are actually discounting at least one interest rate cut until the end of the next year. Is the Fed ready for this? In our view, many FOMC members are not and will want to see clear signs of economic slowdown before they could even think about lowering rates. However if there was indeed such a discussion, that would be enough to keep markets speculating about this possibility (Wednesday, 7pm BST).

The yellow dots show that FOMC members do not see rate increases this year. The lines (Fed rate futures) suggest an interest rate cut no later than next year and these expectations have actually increased since the last meeting. Source: Bloomberg, XTB Research

EURUSD technical situation

One can see a clear double bottom formation on the EURUSD D1 chart. However, the pair remains in a downward wedge and the price still needs to break out of it. The key resistance is quite far – at 1.1515 – while the key support remains at 1.1175. Source: xStation5

DE30 technical situation

The technical situation on DE30 is very interesting. This market has been in a very strong upwards trend since late December 2018. This trend has been augmented by the reversed head and shoulders formation and eclipsed by a clear upwards channel. However, the price is at an upper limit of the channel and we can see the evening star (bearish) formation. The nearest support is at 11775 points. Source: xStation5  

This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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