A Split Fed Confusing USD Bulls

August 18, 2016

Image: Kurtis Garbutt, Flikr (cc)

Just yesterday we had Dudley trying to commit to a 2016 rate hike… Then almost immediately Bullard goes the opposite direction with the FOMC Minutes!

That’s right. As expected, yesterday’s headlines of the Fed threatening to derail the US stock market rally were nothing but noise.

“Ah central bankers. Masters of making nothing sound like something…

Nothing to see here folks, move along now.”

As a trader, you have to learn to take these headline moves for the noise that they are. Time after time, the common sense decision is most often to fade them. This is because if you’re right, then the market re-pricing will give the bigger move. If you’re wrong however, then price will most likely continue to inch slowly against you into your clearly defined risk (stop loss) levels.

Make sure you take a look back at our ‘trading misplaced market expectations‘ blog for further thoughts around this topic.

Turning our attention back to Forex markets and we see the market disappointment we speak about was for the USD bulls. We were watching this GBP/USD level in yesterday’s pre-FOMC blog and low and behold, the spike only got as far as the zone before being slapped back down again.

GBP/USD 1 Hourly:
Click on chart to see a larger view.

Levels are king and any traders who fade the news were happy to take anywhere up to 50 pips from the high at the top of the zone. Well done to those that stood by their levels.

Continuing along the USD theme, we come to another pair at a significant level: USD/JPY.

USD/JPY 4 Hourly:
Click on chart to see a larger view.

Following the bank of Japan communication disaster, price has returned back to the level before their well-publicised disappointment.

The pair’s inability to see a daily close below the level has shown how significant it is going to be, so watch this space with price dancing around it as I write this blog right now. A break is most likely to see things get messy quickly again. The USD/JPY market isn’t exactly renound for its rationality!

See you on the @VantageFX Twitter!


On the Calendar Thursday:
AUD Employment Change
AUD Unemployment Rate

GBP Retail Sales m/m

USD Philly Fed Manufacturing Index
USD Unemployment Claims

Trade Forex with Australian Forex Broker Vantage FX, and earn 8.88% interest on your account balance!

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently, any person acting on it does so entirely at their own risk. The expert writers express their personal opinions and will not assume any responsibility whatsoever for the Forex account of the reader. We always aim for maximum accuracy and timeliness, and FX broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.


Free Daily Market Update

Live Spreads



Sign up to the latest forex news and daily FX trading setups

Get started with a FREE $50,000 demo account