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U.S. Dollar Soars On Fed’s Dot-Plot And Traders Profit

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We got what we have been looking for in a best-case scenario relative to our trades: A hawkish surprise from the Federal Reserve and a subsequent big price move in the U.S. dollar, providing a large monetary profit. We were able to take a 100-pips gain with our short trade in the EUR/USD and a 67-pips gain in the GBP/USD.

The Fed sent a more aggressive signal in order to prepare the market for a taper. Fed Chair Jerome Powell said that officials would begin a discussion about scaling back bond purchases, admitting that “the economy has clearly made progress”. “You can think of this meeting as the talking-about-talking-about meeting, if you like” Powell added referring to the taper debate.

However, the biggest surprise was the Fed’s dot-plot forecast that showed eleven officials saw at least two rate increases by the end of 2023 while seven of them saw even a move early as 2022. In comparison to the March forecast: The newest projections showed 13 of 18 Fed officials favored at least one rate hike by the end of 2023, versus seven in March.

The greenback soared on that hawkish signal.

Powell, however, cautioned the discussion about raising rates, saying it would be “highly premature”.

Are there more dollar gains in store?  Maybe, as the Fed inches towards tapering but traders should be cautious amid thin liquidity conditions and the summer doldrums. Price movements could be limited to resistance and support levels.

EUR/USD: The euro dropped slightly below 1.20 but refrained from a dip below 1.1980 – at least for now. Below 1.1980 we see a next lower target at 1.1930. A break below 1.19 could even see accelerated bearish momentum towards 1.18 and 1.16. On the upside, a current resistance is seen at 1.2120.

GBP/USD: The cable broke below 1.40 and if the pair now falls below 1.3970 it may extend its slide towards 1.3910 and possibly even 1.38. A current resistance is seen at 1.41.

We wish you good trades!

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Global Selloff: U.S. Dollar Benefits From Yield Rise

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And the selloff began. Global bonds experienced an aggressive selloff Thursday that drove steep losses in Treasuries and U.S. stocks. The benchmark Treasury yield spiked to a one-year high and the U.S. dollar in turn benefited from rising yields. Also, the British pound which was already extremely overbought experienced a sharp selloff, succumbing to the dollar’s rise.

Unlike the strong correction seen in GBP/USD which fell below 1.40, the EUR/USD refrained from a steep decline, still holding above 1.21. If the euro falls below 1.2090 it may extend the decline towards 1.2060 and 1.20.

In the GBP/USD we now see a support at 1.38.

The DAX fell victim to Thursday’s selloff and slid below 13800 towards 13680. A next lower target is now seen at 13600 followed by 13400. Buyers in the DAX will need to wait for another breakout above 13800 in order to expect a higher target at 14000.

We wish you good trades for the last trading day in February and a peaceful weekend!

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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USD Continues Advance Against EUR

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Dear Traders,

The U.S. dollar continued to climb higher after U.S. President Trump announced that the USA was pulling out of the Iran nuclear deal. His decision sparked concern that it could increase geopolitical tensions between the USA and its international allies.

EUR/USD

Looking at the 4-hour chart we see that the recent downward channel is still intact suggesting that a bottom might not be in place yet. Thus, the euro may continue its tailspin towards the 1.1770/50 area. A lower support zone runs from 1.1660-1.17. The previous 1.19-support could now turn into a short-term resistance.

Let’s be surprised.

 

GBP/USD

The key support level around 1.35 has proved to withstand the downward pressure in the pound ahead of tomorrow’s BoE meeting. Sterling bulls hope for a hawkish hold at the Bank of England’s Super Thursday but we recommend traders to prepare for both scenarios, bullish and bearish. We shall come back to the specific breakout scenarios tomorrow.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2018 Maimar-FX.

www.maimar.co