The Dovish U-Turn from the FOMC plunges the Greenback

1 min read

The price movement in the USD Majors said it all. The extremely cautious & dovish tone from the Federal Reserve (U.S Central bank) caused huge losses to the Greenback against its counterparts. While the FOMC was optimistic on the robust job creation & domestic economic growth, external factors like U.S-China trade talks, Brexit uncertainty and slowing global economy were hanging on the horizon as dark clouds. All of these have caused the Feds to suddenly adopt a wait-and-see approach as there are no more rate increases expected this year. This is not the first time Feds have taken this route – back in 2008 when the last financial crisis erupted the central banks dropped the interest rates from over 6% to less than 1% in no time. Following is the monetary policy curve for the major central banks – as you can see that FED has shifted position from being the most hawkish sentiment to a neutral bias within a couple of months.

A lot of times these rate decisions like this bring wild moves in the pairs & it is always prudent to stay on the side & not trade until the dust settles down. Today, however the initial sentiment reinforced itself as Majors gained against the reserve currency. The sudden shift in the sentiment from the FED. If you do still intend to trade these volatile economic events, USDJPY always provides the cleanest reaction and the correct bias. Let’s review hourly charts of the Majors to see how individual pairs reacted and their Short term (ST) & Medium term (MT) biases & sentiment.

EURUSD – ST bullish, MT neutral 
GBPUSD – ST bullish, MT neutral

USDJPY – ST bearish, MT bearish

USDCAD – ST bearish, MT neutral

AUDUSD – ST bullish, MT bearish

NZDUSD – ST bullish, MT neutral

USDCHF – ST bearish, MT neutral

If you want to receive real time alerts for these Forex pairs, I send them out on our Mobile trading platform Tradealike. Also post trade ideas on my Twitter handle & StockTwits profile on a daily basis. Happy trading.

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Faisal Khan Faisal is based in Canada with a background in Finance/Economics & Computers. He has been actively trading FOREX for the past 11 years. Faisal is also an active Stocks trader with a passion for everything Crypto. His enthusiasm & interest in learning new technologies has turned him into an avid Crypto/Blockchain & Fintech enthusiast. Currently working for a Mobile platform called Tradelike as the Senior Technical Analyst. His interest for writing has stayed with him all his life ever since started the first Internet magazine of Pakistan in 1998. He blogs regularly on Financial markets, trading strategies & Cryptocurrencies. Loves to travel.

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