In the next two weeks, we are waiting for two major events in the current environment regarding the euro and the US dollar.
These are the decision of central banks on interest rates:
* ECB Interest Rate Decision on October 27 at 15:15 MSK.
* Fed Interest Rate Decision on November 2 at 21:00 MSK.
It is expected that both regulators will increase the rates by 75 basis points.
For news traders and rollback traders these events are a great opportunity to make money fast on the EURUSD pair in this case.
Although other instruments can be taken for trading: for the decision of the ECB, these are EURJPY, EURCAD, EURCHF, and other pairs with the euro. For decisions of FRS, these are GBPUSD, USDJPY, USDCAD, and other pairs with the US dollar.
During the last several months the hawkish policy in the US related to the high rates of increase in interest rates led to the strengthening of the US dollar and made the regulators from other countries keep abreast with it to avoid the weakening of the national currency. The Central Bank of the Eurozone is no exception.
So which trading strategy can be used?
Here is the strategy (timeframe M15):
1. If the interest rate of the Eurozone increases by 75 b.p. or more on October 27, buy EURUSD at the moment of data publication.
If the interest rate increases by less than 75 b.p. or decreases, sell EURUSD at the moment of data publication.
Close the trade one hour after entering the market.
Place Stop-Loss below the previous day's low for buying and above the previous day's high for selling.
2. Even though an event like the US Fed's interest rate decision didn’t show obvious benefit in news trading under normal conditions, in the current situation of the rapid strengthening of the US dollar as a result of the Fed's hawkish policy, it is possible to work with this indicator.
If the interest rate of the US increases by 75 b.p. or more on November 2, sell EURUSD at the moment of data publication.
If the interest rate increases by less than 75 b.p. or decreases, buy EURUSD at the moment of data publication.
Close the trade one hour after entering the market.
Place Stop-Loss below the previous day's low for buying and above the previous day's high for selling.
Don’t forget about the volatility that grows after the publication of important news, spread, and money management!
Warning!
Trading on financial markets implies high levels of risk and can lead to a loss of investment capital. The MarketCheese team isn’t responsible for the possible loss of Your investment funds.
This content is for informational purposes only and is not intended to be investing advice.
