USD rallies on FED testimony; “headwinds are now tailwinds”

USD rallies on FED testimony; "headwinds are now tailwinds"

How Do We Make Money Today?

We’ve just had round 1 of the FED testimony today and from the move on the major currency pairs it was a resounding win foir the USD which brallied across the board, albeit relatively small moves for a central bank announcement/speech.

Key components of Federal Reserve Chairman Jerome Powell’s speech:

Pledged to “strike a balance” between the risk of an overheating economy and the need to keep growth on track, told U.S. lawmakers on Tuesday that the central bank would stick with gradual interest rate increases despite the added stimulus of tax cuts and government spending.

Some of the headwinds the U.S. economy faced in previous years have turned into tailwinds, Powell said, noting recent fiscal policy shifts and the global economic recovery.

The Fed is expected to approve its first rate increase of 2018 at its next policy meeting in March, when it will also provide fresh economic projections and Powell will hold his first news conference. Fed policymakers anticipate three rate increases this year.

It’s interesting to see that the market is interpreting the FED comments as somewhat hawkish, and that’s more informative about the trading bias right now than about the Fed’s actually likely policy path.

So we have a nice ‘lead’ into the market with a slightly bullish USD bias today. But it’s not massively convincing. There’s not a lot of data out over the next 24 hours so ‘technical trading’ will take over.

The USD is either going to retrace the recent moves OR it’ll be a slow bleeder and slowly climb.

I’m USD bullish for now so I’ll be looking to get long USD on dips or on breaks of resistance.

Trading Pairs to Focus On

Most of the majors are attempting what I would call ‘tepid’ breaks as the USD rallies.

But there’s a few pairs that don’t fit the picture due to ongoing or current geo-political events: Sterling & the Canadian dollar.

We really need to see how the US equity market closes to get a good gauge of market sentiment towards the FED testimony. i.e. Risk on or Risk off

AUDUSD, NZDUSD, USDJPY & EURUSD

 

Technical Set Up – What’s Happening with the Majors

USD rallies on FED testimony; "headwinds are now tailwinds"

 

Today’s Fundamental Drivers

USD rallies on FED testimony; "headwinds are now tailwinds"

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance into your daily preparation.

Your Daily Analysis needs to become habitual.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your sucess: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behaviour will take over).

Tune up your charts & get ready to trade.

Brad

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