FX SIGNALS – Dollar edges lower vs euro on ECB rate hike bets

NEW YORK (Reuters) – FX SIGNALS – The dollar slipped against the euro on Monday, at one point hitting a fresh 9-month low, as the common currency found support from European Central Bank officials’ comments signalling additional jumbo interest rate rises in Europe.


The euro reached as high as $1.0927, to trade at its highest level since April last year, before paring gains to trade up 0.05% at $1.08605.

The euro’s early gains were aided by comments from European Central Bank (ECB) governing council members Klaas Knot and Peter Kazimir, who both advocated for two more 50 basis point hikes at meetings in February and March.

The ECB will keep raising interest rates quickly to slow inflation which remains far too high, ECB President Christine Lagarde said on Monday, largely repeating the bank’s most recent policy guidance.

A Reuters survey of analysts also favoured hikes of 50 basis points at the next two meetings and an eventual rate peak of 3.25%, from the current rate of 2%.

“Really what’s driving things is central bank policy divergence,” said Joe Manimbo, senior market analyst at Convera in Washington.

“At least in the current cycle, the market thinks the Fed’s most hawkish days are behind it. So when you weigh the outlook for central bank policy, it depicts the dollar at a disadvantage, given market bets on the Fed moving more slowly than its counterparts abroad,” Manimbo said.

Fed fund futures have priced out almost any chance the Fed could move by 50 basis points next month and have steadily lowered the likely peak for rates to 4.75% to 5.0%, from the current 4.25% to 4.50%.

With monetary policy meetings for both the Federal Reserve and ECB set for next week, major currency pairs stuck close to familiar ranges on Monday.

The euro was also being supported by an easing of recession fears amid a fall in natural gas prices, according to Rabobank head of currency strategy Jane Foley.

Dollar Bears on the Run as Bets

FX Signals – Dollar Down With Investors Looking to Thursday’s ECB Meeting

The dollar, which has risen against the yen after the Bank of Japan (BOJ) defied market pressure to reverse its ultra-easy bond control policy last week, was up 0.83% at 130.67 yen, following last week’s wild gyrations between 127.22 and 131.58.

“The Bank of Japan, this month, signalling a hesitancy to turn hawkish has really taken some steam out of the yen’s rebound,” Manimbo said.

U.S. dollar rises vs most currencies

Analysts assume the BOJ will stand the line until at least the next policy meeting in March, though one hurdle will be the expected naming of a new BOJ governor in February.

Euro inches higher ahead of ECB

Sterling retreated on Monday from a seven-month high against the dollar hit in Asian hours, having been helped last week by data showing the British economy was performing better than feared, which also drove expectations of more interest rate hikes. The pound was down 0.25% to $1.23685.

Meanwhile, bitcoin was little changed on the day at $22,849, steadying after having jumped by about a third in value since early January, as investors shook off pessimism following the high-profile collapse of the FTX crypto exchange FTX.

FX SIGNALS – Dollar edges lower vs euro on ECB rate hike bets

Asia FX rises in holiday trade as China recovery bets grow

FX SIGNALS – Dollar edges lower vs euro on ECB rate hike bets

    1. Not only does leverage amplify your losses, it also amplifies your transaction costs as a percentage of your account. Check out this illustration.

      How To Find The Best Forex Signals

    2. Never Underestimate Leverage

      Understand when to take advantage of leverage and when it can damage your account. Here are some things to take note of.

  1. Position Sizing

    Position sizing is setting the correct amount of units of a currency pair to buy or sell.

    1. Position Sizing

      Knowing how to properly calculate your position size is crucial in risk management. Here’s what you need to calculate your position size.

      Learning Forex: Foreign exchange market

    2. Calculating Position Sizes

      Here are some examples on how to calculate your position size whether your account denomination is the same as the base currency or not.

    3. How to Calculate Your Position Size in Different Forex Pairs and Account Currencies

      In this lesson, you will learn how to calculate your position size when your account denomination isn’t one of the currencies in the pair currency pair that you wanna trade.

    4. Summary: Position Sizing

      No time to crunch the numbers yourself? Check out our position size calculator tool that can help you manage your risk well.

      How to Start Making a Profit With Forex Trading

  2. Setting Stop Losses

    Stop losses not only help you limit your losses and help you move on, they also eliminate the anxiety caused by losing on an unplanned trade.

    1. What is a Stop Loss?

      Thinking where to place stop losses is one of the most important things that you should do before even entering a trade. “Live to trade another day,” is something you should always remember in trading.

    2. How To Set A Stop Loss Based On A Percentage Of Your Account

      Never ever set stops based solely on the amount you’re willing to lose. Setting stops based on your account balance is a sure fire way to lose!

      Learning Forex Signal Market

    3. How To Set A Stop Loss Based On Support And Resistance From Charts

      One of the best ways to set stops is based on charts. Find the places where prices can’t seem to push or break and then decide where to place your stop.

      Benefits of trading the forex market

    4. How To Set A Stop Loss Based On Price Volatility

      Did you know that you can set stops based on the volatility of a certain pair? Knowing how much a currency pair tends to move can help avoid being prematurely taken out of a trade by the random movements of price.

    5. How To Set A Stop Loss Based On A Time Limit

      Time is of the essence, even when trading forex. Set up a time limit to cut off those dead-weight trades so your free to move on to new opportunities.

    6. 4 Big Mistakes Traders Make When Setting Stops

      There are a lot of mistakes traders make when setting stops. Here’s a list of the most common ones.

    7. 3 Rules To Follow When Using Stop Loss Orders

      Often times, the market doesn’t move in accordance with your expectations. You have to know the times that you should stick to your pre-determined limit orders or make stop adjustments on-the-fly.

    8. Summary: Setting Stops

      Like anything else in trading, setting stop losses is a skill. If you continually practice the correct way to set stops, you’ll be one step closer to becoming a professional risk manager!

FX SIGNALS – Dollar edges lower vs euro on ECB rate hike bets