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EUR/USD Forecast 05/12/2013

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EUR/USD Chart 05/12/2013
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Euro is being sent higher by Mario Draghi from the ECB

With the rate on the binary options forex pair currently at 1.3635 we would be buying calls on a sustained break above 1.3650, the pair could actually target 1.37 depending on the outcome of tomorrow’s non-farm payrolls in the US.

While the ECB press conference is ongoing we will take a look at the chart of the EUR/USD today and try to sport some trading opportunities. As the price skyrockets higher in the absence of negative rhetoric from the president of the European Central Bank. He made no mention of further liquidity injections into the banking system which is good for the Euro.

The pair started trading in Asia around 1.3590 and in a very quiet market has trade water for the most part of the session. Europe has come to the rescue and rates spiked to 1.3639. In the wake of the ECB announcement has EUR/USD traded lower to about 1.3544, but as Mr Draghi went on speaking rates spiked higher to current levels.

Mr Draghi has openly dismissed any simulative policies in his press conference and the euro reacted immediately by going back to trade higher just below 1.3645. No more free money for the banking system was one of the key messages that the President expressed which the market perceived as no substantial further action in the side of the ECB.

The ECB has downgraded inflation forecasts for the next couple of years, however it has not communicated in any way that this might affect their policy and that they have a willingness to get inflation closer to their target at 2%.

The risks to the downside are now limited, but generally if we see the pair break below 1.3590 we would be looking to sell puts on an hourly basis, again for now we prefer to buy calls on the same time horizon.

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