Yesterday the main focus for USD traders was definitely the insight on what happened on the last FOMC meeting. Analysts got a peek and most importantly had the view of voting members on the way forward on matters monetary policy. From the deductions, inflation is a weighty matter and most members were actually negative about future prospects despite the recent pick-up in wages and jobs. We also saw that consumers are finally loosening their purse strings as retail sales surpassed expectations rising 0.6% in July. All this dovish stance from the Feds and still chances of a rate hike as tracked by the fund futures still hovered above 50% with further USD sell off fuelled by the scandalous Trump administration. To start with, day after day investors are actually losing confidence on the ability of these republicans to pass critical fiscal reforms. These include issues like taxation, infrastructure expenditure and further job creations which were the very thing that got Trump elected. As he got embroiled locally and internationally, implementation probability continues to trend lower.
Despite these hindrances, the USD is turning for the better and that is why I’m long the USD and off loading the Swedish Krona. Technically, there is a clear double bottom in the daily chart as price action continues to make a series of higher highs both in the daily and weekly chart. As you can also see in the attachment, there is a buy signal in the weekly chart as bullish momentum pick up in the daily chart.
Trading this pair will be simple, as always entry will be in the 1Hr chart. Wait for a buy signal probably between the minor support zones of 8.06-07 and aim for a risk reward ratio of 1:3. Ideal stop loss will be below today’s lows at 8.05.
If this is executed well, then this trade will turn out as follows:
Buy Limit: 8.06-07-you can wait and enter manually which is always the best option when a buy signal has been printed by the stochastics.
Stop Loss: Below 8.05
Take Profit: 8.2, 8.4-ideal
Have a good trading day.