fxtalk

If you are wondering what was the volatility immediately after the Fed's announcement, here is a 1min chart:
As expected, the pair had crazy moves back and forth, and those with opened positions at 18:15 GMT who did not use a low leverage and a loose stop-loss are now licking their wounds.

As I said in my previous post, if the Feds choose not to match the market expectations for a stimulus, but to pump in just enough to give a clear message that the US economy is on the right track, this will create the conditions for a short-term appreciation on USD.

Right know this is the case: the Feds decided to keep the current rates unchanged, but they will stimulate the market injecting about $75 billion per month until June. This would mean that the market should expect a total of $800 - $900 from the Feds during the next month, which is less than it's expectations.


The clear message was that FOC "will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.”

Today is a bug day for all USD based pairs, but the most affected pair will be EUR/USD.

After 28 higher highs and higher lows the pair seemed to end this rally and created some hope for a reversal.

Although, yesterday, the pair tested the 1.4050 barrier we still need to see a break above 1.4080 to negate my bearish outlook. If it will happen, the rally will target the 1.4400 -1.4500 position, with the possibility of breaking above it afterward.

As I said, I maintain my bearish outlook for now, but keep a close eye on EUR/USD. My advise would be not to open any position for now and way for the clear confirmation of a bearish or bullish movement.

FOMC is the major event for today and until it happens it is unlikely to see any major moves in currencies. What to expect from FOMC? Either a short term USD consolidation (which will confirm my bearish expectations, at least on the near future) or to see the USD remaining under pressure, which will give even chances for both bearish and bullish scenarios.

At this moment the markets are expecting a stimulus, and it's no doubt weather the Feds or inject or not. The question is how will they do it?

If the Feds choose to meet or pump in beyond market expectations the USD will remain under pressure and extreme care will be needed when opening new positions on EUR/USD.

If the Feds choose not to match the market expectations for a stimulus, but to pump in just enough to give a clear message that the US economy is on the right track, this will create the conditions for a short-term appreciation on USD.

All in all, I don't expect to see much move into the USD based currencies before the Feds Rate Decision announcement. My suggestion will be not to open any new positions up until the big announcement and, even afterward, keep a close eye on the pair movement. If you are already in the market, be prepared to close your position without profit and come back later when the market will give you clear signals.

Yesterday I was talking about RBA's intervention that created the premises for a bearish trend in the near future. Until now the currency has confirmed this outlook and is giving clear signals for opening short positions.

Yesterday I was advocating going short around 1.0000 with a stop-loss around 1.0150 and those who managed to open this position should be pleased now, since the currency is below 0.9980.

I maintain my bearish outlook for the next days, but those who want to open any position today, keep a close eye on the Feds Rate Decision event. I strongly suggest not to enter the market today unless there are obvious signals. Because of the FOCM event the trade might get choppy.