Preview: Have the ECB enough ammunition to cause any upsets today?
Today's decision from the ECB is once again eagerly awaited 27 April
Policy/rates to remain on hold but it's the press conference that will set the robots off so that means we should expect some volatility regardless of overall stance.
That's the thing with algos, they react to every tiny thing, whereas humans can choose not to so whatever Draghi comes up with we need to treat with relative caution as ever.
Last time out the bots and traders alike got the notion that Draghi was talking in more hawkish tones and we saw the euro make some decent gains . It wasn't long though before he was telling everyone not to get carried away and those gains were largely reversed.
So what's changed this time ? Well not a lot. Inflation is still heading higher by and large on a yy trend but there's a way to get until target and we get the latest EZ readings tomorrow. We can guess that the ECB might have taken a sneaky peak.
Recent PMI readings, plus economic and confidence data have been generally positive too but there is also the uncertain global political landscape that continues to cast its shadow not least of which the on-going French election where we see the decisive 2nd Round on 7 May.
Draghi's no fool and he'll use that backdrop to remain in relatively neutral mode today while keeping his options open and markets second guessing.
I still believe that the euro has inherent dip demand and that Le Pen is unlikely to actually upset the apple cart next week but a strong showing would cause a wobble lower which won't exactly displease the ECB either. A win-win to a degree as long as she doesn't actually win herself.
And that's what we don't know, and nor does Draghi, and therefore the second-guessing continues all -round so his caution will be understandable.
As always trade what you see and assume the robots will get there before you do anyway so you'll be chasing your, or someone else's, tail if you choose to get caught up in any dramatic fallout.
EURGBP has been a notable faller today giving GBPUSD a lift and we're still near session/recent lows at 0.8447. Month-end demand from the BUBA may already have tempered some of the fall but that's another thing we just don't know.
So as ever my advice is trade what you see, not to reason why just sell and buy. Fortune may well favour the brave (sometimes) but one thing we can be sure of in Forex is if you miss one or two chances there'll always be more ahead as I highlighted again in this post after last week's GBP rally. Pick your preferred levels and be patient.
If in doubt keep out and remember,