Mixed market reaction to FED

One of the most anticipated market events came today and market’s reactions were mixed. As expected Federal Reserve kept interest rates unchanged. Dollar initially fell, then rose and then dropped again. This kind of reaction must have cost a lot of market participants a lot of money. Those that tried to trade in both directions must have lost money. Of course, these kinds of things do happen. One has to be very patient and not to give in to despair when a streak of losses occur. It is far more important to follow your system and trade with discipline. 

Two key events are in the horizon. One is Bank of England rate decision that is due tomorrow at 11:00 GMT. I have intentions trading British Pound against one of commodities, possibly New Zealand currency. The same can be said about the other event: European Central Bank interest rate decision coming at 11:45 GMT. I will probably be looking at eur/nzd pair to make a long or a short trade. Non Farm payrolls will surely be the last risk event this week. I see gold as of particular interest for this event. It has risen quite a bit in the last month and will probably correct itself to make new lows in the coming weeks. Let us see what happens tomorrow though. Do not overtrade!


I also suggest you reading my post: http://forex-news-trading.blogspot.com/2013/08/ultimate-guide-to-successful-day-trading.html

Yen and Dollar to strengthen next week?

The longer term picture for Japanese Yen and US dollar are quite bullish. You hopefully noticed that the most recent strength in US dollar index was basically due to the fact that Yen was weak. You could actually see dollar weakening in most pairs and strengthening on the Yen and dollar index strengthening at the same time. This has been changing lately. You can see how dollar weakened this weak across most currency pairs, not necessarily Yen, and dollar index collapsed. Anyway, we have very rich week upcoming. Major economies will announce their interest rates decision: US, Europe and UK. I do hope to see some ‘fireworks’. 

On the one hand aud/usd and nzd/usd displaying clear technical bullish patterns. On the other US dollar index is close to its’ support. What does that mean? Being a technician I am ready to go either way. Commodity currencies look bullish against most other currency pairs too: Euro, British Pound and Swiss Franc. I am thinking about going long in aud/usd and shorting gbp/aud, gbp/nzd as well as eur/nzd and eur/aud. It looks like major time for correction in these pairs has come. And the timing for that seems to strike next week. Get ready and do your own analysis over the weekend.

News can push European currencies lower

A few releases from Europe are scheduled today. From technical point of view all European currencies look extremely vulnerable, particularly against commodity currencies: NZD, AUD and CAD. Swiss Franc has already broken key supports in these pairs and is rapidly going down. Other crosses, such as eur/nzd and gbp/nzd as well as eur/aud and gbp/aud are threatening to break down any time now. What could trigger their fall?

IMF global economic outlook may trigger a sell-off in Euro and NIESR Gross Domestic Product Estimate may break the British Pound. Pound has already been hit by poor economic data today and is likely to continue going down. This is confirmed by both fundamental and technical factors. Euro is in a slightly better position, but the situation may change any time now. One of the greatest events that could turn everything around is tomorrow’s FED minutes from last month coming at 18:00 GMT, followed by FED’s Ben Bernanke speech at 20:10 GMT. 

Pound pairs should be sold on rallies. US dollar still remains the strongest currency for the time being and should be bought on dips. The fate of commodity currencies will be decided upon on Wednesday night when data from Australia is released. See you then.