It’s widely expected that The European Central Bank will cut it’s base lending rate by 25 bps later this week.
Now fundamentally speaking a rate cut is usually considered to be a negative for the currency, but here we are again in a position where we must look at the “current environment” – then do our best to apply the fundamentals.
Assuming that every “newbie forex trader” on the planet will take it as a “given” that the Euro will plunge on the news, I’d imagine taking the other side of that trade ( and we know it’s not so fun trading against Kong ) as the current environment will likely absorb any further easing ( or attempt to make things “easier” in Europe ) as positive for world markets in general.
Coupled with the recent weakness in USD across the board – I would expect the EUR to move higher and may even take my long-awaited trade at 1.3170 mentioned here: http://potstockwatch.com/2013/02/10/long-eurusd-at-1-3170-watch-me/
Otherwise my short USD vs the Commods trades as well CHF have been performing well over the past 3 days, as well the active trading here long JPY “still” looking to see a much larger bounce .
The USD has continued lower as suggested while equities markets still struggle to reach new highs.