Euro-selling strategy, will the ECB Council be the starting point!? ~Strategy for October 25~

◎ Strategy and Position

EUR/USD Short Bias

Currently holding a short position on EUR/USD.

Add (new) position"1.1300" selling position

EUR/USD 4-hour chart

EUR/USD Daily chart

◎ Key points

ECB Council meeting and Draghi's press conference

I don't expect policy changes at the ECB Council. The focus will be on the statement and the press conference. Recently, European indicators have been weak. Is the weakness temporary or a sign of economic slowdown? The outlook from the ECB Council is critical. If it’s temporary, no issue, but if there is a slowdown, concerns about the pace of tapering or rate hike outlook next year may arise.

Italy Budget

There is growing confrontation between the European Commission and Italy over next year's budget. The European side has rejected Italy's budget. In response, Italy insists there will be no revisions. No Plan B. It is also expected that S&P credit rating review will take place tomorrow. Markets are selling Italian bonds on concerns about Italy, raising yields. The yield gap with German bonds is widening. The widening Germany-Italy yield spread is negative for the euro. Pay attention to developments in Europe, Italy, and S&P.

Germany 10-year bond yield chart

Italy 10-year bond yield chart

This timeECB Council meeting is likely to be more dovish in tone. While it may not change forward guidance, there is expectation of some statements addressing concerns. If the stance is managed well, the euro may hold current levels. If negative statements or content arise, euro selling could resume starting today.In EUR/USD daily chart, it is approaching the previous low.If it breaks the low, a renewed downtrend is possible.If it cannot break the low and rebounds, it could re-enter a range. This looks like a pivotal Council meeting to watch.