ForexSpirit

I only made one trade during the past week. It was a pretty quiet week, with EUR-USD price sticking well within the current 1.29-1.305 range.

On Monday price hit a resting order I had at my b-day level of 1.2922. I held the position until Thursday morning when both the BOE and ECB were to announce their interest rate decisions for the month. Both central banks were expected to keep rates unchanged. Since the euro had been rising all week up until that point I was concerned that an actual no change announcement from the ECB would result in a ‘buy the rumour, sell the fact’ scenario. I thus exited my position at 1.2990, and was prepared to buy again in the bottom half of Q1 if rates did fall.

There were no surprises from the banks, and both British and European rates were kept unchanged. Trichet pretty much said that the ECB will hike rates next month, which kept the euro buoyant. Price popped back above 1.30 during his press conference and remained at around the 1.304 level until early in Friday’s London session, whereupon we dipped back to just below the 1.30 level.

I was relaxed and comfortable during the whole time of holding this trade. I could have exited on Tuesday or Wednesday for 50 or 75 pips, but I wanted to let the trade mature up until the rate announcements. The euro move up suggested to me that the markets were predicting a slightly greater chance that the ECB might actually hike rates this month than had been previously deemed possible.