Monthly Forex News Events that Might Affect EURUSD Volatility – Feb 2018

Monthly Forex News Events that Might Affect EURUSD Volatility – March 2018

Monthly Forex News Events that Might Affect EURUSD Volatility – March 2018

The EURUSD bullish trend continued to reach new higher grounds. However, despite the strong bullish EURUSD, February looks to be the first bearish month in a while. While EURUSD reached overbought territory we still need a strong fundamental catalyst to change the direction of the trend.

The majority of the Fed members are forecasting three more rates hikes in 2018. But it seems that for the time being the market is more concern with the fact that the ECB which is on the other side of the monetary policy spectrum might be moving away from their easing policy which is a major shift in the monetary policy.

The ECB President Mario Draghi has voiced concerns that the euro strength is a source of uncertainty. This will make it harder for the ECB to begin the tapering process because the inflation outlook can be negatively impacted by the strength in the euro. February was very volatile and active month as we’ve consolidate the previous gains and moved in a wide trading range. Moving forward the seasonal pattern for March sees again EURUSD moving higher but by the end of the month we should see a retracement of the previous gains.

The seasonal pattern only gives us the tendency of a particular currency to exhibit a certain behavior at a certain time, so we have to carefully monitor the pattern and how the fundamental forces interact with the price action. Going forward, we’re going to analyze and disseminate the major news event for the upcoming month that can be the catalyst for higher EURUSD volatility.

“Don’t risk significant money in front of key reports, since that is gambling not trading.”
– Paul Tudor Jones

Monthly Forex News Events that Might Affect EURUSD Volatility – March 2018

The new Fed chairman Jerome Powell, will testify for the first time in front of Congress on the last day of February and the 1st day of March. This is about to be a major risk event as he is about to give his outlook on interest rates.

Based on the market consensus the new Fed chairman is expected to follow the gradual interest rate increase policy of Yellen and in this regard, there is lots of predictability which markets love.

Now, let’s move forward and see what the biggest risk events in March 2018 are:

  • Thursday, March 1, 2018 – The Germany GDP figures for the last quarter of 2017 are scheduled to be release. The German economy expanded 2.5% which is a solid growth rate supported by higher exports.
  • Thursday, March 1, 2018 – The US PPI the Fed’s favorite inflation measurement are scheduled to be release.
  • Sunday, March 4, 2018 – Parliamentary elections are held in Italy. According to the latest polls Berlusconi’s coalition are set to win the election with a 37.2% support score.
  • Wednesday, March 7, 2018 – The EU final GDP figures for the Q4 are scheduled to be release. The EU economy grew by 2.7% according to the last reading which supports the EUR/USD bullish trend.
  • Thursday, March 8, 2018 – The ECB interest rate decision and monetary policy announcement is probably the most anticipated ECB meetings due to the recent euro strength. The ECB is expected to revise up its quarterly forecasts and to also signal a hawkish tone and subsequently give insights into when it’s the most appropriate time to unwind the QE program.
  • Friday, March 9, 2018 – The NFP job report, which can be the catalyst for some trend development is again one major risk event of the week. The Non-Farm payrolls posted a solid 200k new job during the first month of 2018 and we should see the positive trend in the labor market to continue. Recent tax reform is expected to bring new jobs. We also saw a healthy labor market in 2017 that has sent the unemployment rate to 4.1% a 17-year low, a trend that is expected to continue in 2018 as well.
  • Tuesday, March 13, 2018 – The US CPI inflation figures is again one of those market drivers that can have a big impact on the currency exchange rate.
  • Wednesday, March 21, 2018 – The Fed interest rate decision is probably the biggest risk event of the month as the Fed is expected to hike rates for the first time in 2018. This is also the first time the new Fed chairman will testify before the Congress.
  • Friday, March 23, 2018 – The European Council meeting can provide us with some news headlines that can produce some volatility.
  • Friday, March 30, 2018 – It’s Good Friday holiday which means we’ll be having low liquidity and low trading activity.

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