Full speech of Yellen to the Economic Club of New York yesterday dropped hints again that the US Federal Reserve will not raise rate in June 2016. This sent USD dropping.
USD has been going up since hints of Interest Rate hike
If you take a look at Dollar Index chart since 2012/2013, it has been going up. Investors have been buying USD in anticipation of a rate hike. Currently there is a pause in this upwards movement, technically it is a sideway consolidation.
My suspicion is that Dollar Index will continue this sideway movement until finally market completed it’s distribution or accumulation process. A breakout towards the top or bottom will confirm it’s final movement. Till then, I will be looking at trading it sideway.
Having said that, US Federal Reserve did say that they will increase interest rate twice in 2016, again depending on outlook and data. My personal opinion is if ever there will be a rate hike, it will be in December 2016.
Strong support of DXY is around the 92-93 level as my colleague wrote in another post.
Dollar Index sideway movement
If Federal Reserve don’t hike Interest Rate at the moment, how to trade forex online to make money?
First, I have to say, I never believe that the Federal Reserve would be capable of raising rate. Well they did once in 2015. However, if you look at US debts, then it doesn’t make sense to raise rate. US debt is heading towards $20 trillion USD. How many zeros is that?
Before Yellen Speech last night, I have already taken a trade to sell USD, specifically to pair it with SGD which I think is a relatively strong currency.
This trade on USDSGD was sold at 1.3670 and it is running at 130 pips profit. It has been trade managed to become a free trade, which means that if price is to turn up, there will be no loss in this trade.
Trade management is very important. And my style is to make a trade FREE so we could trade freely and happily.
To trade forex online, it is advisable to get a regulated broker, especially exotic like USDSGD has quite a big different in spread and quotes.
USDSGD at a profit of 130 pips
Federal Reserve Interest Rate potentially not hiking could benefit USDCHF
USDCHF is a forex pair which I am aiming. For the past 3 months, it has not closed below 0.9688 level. In this structure, it is showing a typical TFLOW pattern for further selling. There is a chance that this pair might be heading into strong support around 0.9500.
USDCHF has further downside
Federal Reserve Interest Rate potentially not hiking could benefit high yield currency especially NZDUSD
NZD is the highest yield majors right now. For NZDUSD, it has not closed above 0.6820. This is a crucial level. If we see a bullish close into this, NZDUSD could potentially head higher towards 0.71.
NZDUSD could head higher towards 0.71
Forex Trade Plan
I will be following the broad plan that USD likely to weaken from selling or taking profit. So these are 2 pairs I’ll be waiting.
Meanwhile those who have traded into USDSGD short, that’s a great trade.
If you want to get my trade thoughts and ideas, do join me in this mailing list.
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