Markets have been quite volatile this year, as we have seen some incredible moves, although they used to be in one direction. First, the USD made quite an incredible rally from March until October as central banks and particularly the FED turned massively hawkish, raising interest rates by around 4% until last week. Then, risk assets turned bullish and the US Dollar declined in the last two months as central banks softened the rhetoric and gave signals about slowing down with rate hikes and probably stopping soon.

They slowed indeed, as four central banks delivered 50 basis points (bps) rate hikes after 75 bps hikes in the previous meetings. They also delivered less hawkish remarks, but they weren’t as dovish as markets might have been expecting, which has left the situation uncertain.

The USD rallied 50 pips higher immediately after the FED rate hike on Wednesday evening but reversed lower and lost 150 pips across the board, while risk currencies such as GBP/USD rallied higher. USD/JPY, on the other hand, lost 350 pips, but eventually the USD decline stopped and buyers came back in the last two days of last week. Today though, risk sentiment was positive in the European session and GBP/USD moved higher, only for us to see a decent reversal near the end of the session.

USD/JPY 5 Minute Chart – The 50 SMA Has Turned Into Support

Buyers are back in control of the smaller timeframes

But, the USD strength didn’t last much and now we are seeing another reversal higher in GBP which we saw as a good opportunity to open a sell GBP/USD signal, while USD/JPY retraced lower to the 50 SMA (yellow) on the 5-minute chart, which has been acting as support. We decided to open a buy USD/JPY signal with the stochastic indicator being oversold and reversing higher, while it seems like buyers are coming back after the retreat.

GBP/USD Live Chart