The euro rallied 100 pips after media reports suggested that the European Central Bank may buy unlimited amounts of short-term government debt to ease the Eurozone's financial crisis. Traders and investors alike have been expecting ECB President Mario Draghi to unveil the bond buying scheme at tomorrow's policy meeting, this was clearly the case as Euro has been grinding higher the past month. Given the economic theory of 'efficient markets' - everything is priced in.
However, it is important to realise we still have NFP this Friday, the QE3 and German ruling court decision next week. Expect volatile markets but follow price action as a leading indicator.
My favoured pairs to be watching over this period are the currencies where I expect a short covering squeeze on any surprise news announcement. These include EURCAD, EURAUD, EURNZD and to an extent EURUSD. Gold is also one to watch closely but be careful of volatility.
Good luck!
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