It was a very important week for US dollar. All eyes were on the Fed interest rates decision. Most of traders expected dovish statement from Powell. But surprise!… He was trying to bring as much optimism as he could. Besides, Mr. Powell even noted ‘healthy US economy’.
As result dollar rallied despite the fact that 10-year Treasury yields dropped to an 8-month low. Well, I think Powell will do his job and keep the dollar strong for some time. But this effect won’t last long. Before having a look at the chart, I want to tell few words about Fed.
As many of you already know Fed was established a century ago to serve as US central Bank. It has a long and interesting story. Financial panics have been always evolutionary for Federal Reserve System. Following Great Depression FOMC (the Federal Open Market Committee) was established as monetary policymaking body. Next important changes happened after the 2008 crisis. Congress passed the Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). It changed the Fed’s governance, increased its transparency, expanded its regulatory responsibilities, and transferred most Fed consumer protection responsibilities to a new Consumer Financial Protection Bureau.
I think it’s important for traders to understand the Fed’s mission.
And now we can have a look at technical analysis. As I mentioned in my previous post, I am shorting EUR/USD
. Last week we had a great opportunity
to reload shorts.
Price was rejected below daily resistance (1.15200 resistance level). So, all my swing targets are intact. I shorted again with 1.1260 and 1.1120 as targets. Those, who missed sell opportunity, should wait for a pullback to 1.1400 range and rejection there to open positions. 1.12600 is a partial profit booking zone for swing traders. After that pullback to 1.13500 can be considered as a reloading range with final target 1.11200. Once gain want to remind you to wait for price action confirmation before taking a trade.