Chart of the Day Bearish USD
Bearish USD: The Federal Reserve cut the Fed Funds Rate target range by 25 bps from 1.75- 2% to 1.5-1.75% as widely expected, marking its third reduction in its benchmark rate this year. There was little change in the FOMC statement, but the Fed removed its language of “to act as appropriate” to support its latest decision to ease policy, offering signals that the Fed is likely leaving rate unchanged for the remainder of 2019.
Fed Chair Jerome Powell’s press conference remarks supported views that the cut was somewhat hawkish in the sense that Powell appeared more positive over growth outlook, referring the move as insurance in the face of global development and against ongoing risks. He said that monetary policy is in a good place, the US and China are inching closer to a deal and the likelihood of a hard Brexit is dimming. Chair Powell indicated that although it might be done cutting for now, the bar to hiking was high. This gave stocks a boost, sending the S&P to an all-time high; it also triggered USD selling.
From a technical and trading perspective the USD is potentially forming a bearish monthly key reversal pattern, this portends further weakness ahead for the USD, all eyes on this evening NY close. It is also interesting to note that a number of the XXXUSD majors are also potentially printing bullish key reversal patterns from Yearly S1 pivots, setting the scene for meaningful corrections in what has been a Dollar dominant market for the past 12 months. As highlighted in the charts, EURUSD, AUDUSD and NZDUSD are all looking very interesting. As the yearly S1 pivots support we can target tests or retests of the yearly pivots EURUSD 1.17, AUDUSD .7350, NZDUSD .6850 as we head into year end.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!