Trading Insights: Turning an ECB dilemma into a trade opportunity

Market Talk

ECB Rate Decision on deck at 12:15 UTC today!

The European Central Bank (ECB) is facing a dilemma of lower EU long term unemployment, and higher EU core consumer prices.

Data as of June 15 2023 6:36 UTC source: TradingView / J. Knobel

Looking at the above chart, the ECB looks to be cornered, with little choice but to keep on hiking

• Good news. You will most likely be getting a raise
• Bets are that wages will have no other direction but to increase

If you have a job and work in the EU, it’s highly likely you will see your paycheck grow as employers will need to fight harder to retain and attract labor.

The EU economy looks good, and this data can be reflected in the price direction of European stock markets.

The above chart illustrates the 1 year performance of the largest 50 EU-traded companies included within the EU Stocks 50 Index.

Thursday, June 15 ECB Interest rate decision

Asset commentary:

• USD/JPY trading at the highest level in 15 years. Is upside momentum intact?
• German 40 index potential to resume the prevailing uptrend

Friday, June 16 Bank of Japan rate decision

Asset commentary:

• USD/JPY bullish conditions could resume on a move above the 141.064 resistance

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Today’s economic calendar

ECB rate hike due today

commentary:

1. Highly likely the European Central Bank (ECB) will increase rates by 0.25%.
2. Highly likely there will be another hike in July, provided that there is no major fall in EU core inflation from now until then.
3. Somewhat likely that the ECB will hike again in September, but even if they do hike come September, that could be the last hike, at least for a while.

The ECB has made it very clear that they will hike 0.25%, if they don’t hike it will be a major surprise and damage the credibility of the ECB.

What may not be a major surprise, is if they hike 0.5% instead of 0.25%!

Source: TradingView / J. Knobel June 15 2023 7:26 UTC

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Commentary & insights

EUR/JPY hits resistance near 15 year highs

Current price 152.90: resistance at 153 if cleared could trigger an extension move towards the 156.40s. Downside risk seen below the 147.58 support.