Safe after the storm

Wednesday was the big day for the Buck with the FED statement at 18:00 GMT and the press conference half an hour later. The market was eagerly waiting to see whether the FED would drop the word patience in relation to the rate hikes. On Wednesday´s post, we wrote that we would sell EUR/USD and GBP/USD if that happened because it means that we could see a rate hike anytime, probably as soon as June. The market had already priced in this change in the monetary policy so we weren´t expecting any fireworks. What we didn´t expect was the massive USD sell-off that we saw in the three hours that followed the statement.      
 
The FED removed the overrated word, but that came with a lot of baggage. They added phrases like “the economy has a lot of slack” and “that doesn´t mean that there will be any rate hikes soon”. So the market was caught unaware by that and the USD lost 400-500 pips against the Euro and the Pound. But most of the other major economies are not in a better shape than the US economy, so the USD still remains one of the few places to park the cash. That´s why we kept selling EUR/USD as it went up. We had some losing signals that evening but had some winning signals as well, when this pair reversed all of the gains during the night and the next morning. 

That shows that most of the currencies can´t hold on to the gains against the USD, especially the Euro and the GBP, so we plan to sell any jumps in EUR/USD and GBP/USD. We opened a sell signal on GBP/USD last night and placed a pending sell signal on EUR/GBP, which was activated during the night and both of them hit the profit target. We opened another sell signal on EUR/USD this morning at 1.0690 and plan to sell GBP/USD again if the price reaches 1.4790 where the 50 and 100 MAs are expected to provide resistance.  

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.