FOMC On Tap Today Market Participants Split March 18, 2015
Opinions Split On What FOMC Will Bring Today
Today will be interesting no matter what the Fed does late in the NY session. The more I look the more I see that opinions are split pretty evenly on whether or not they will remove “patients” from the statement. Its funny when we look back at the good old days when we would trade according to whether or not interest rates would rise or fall. Even though the theme is close I have to admit that just the subtracting of one word or even an additional couple words to the Fed statement would be what markets would be hinged on while rates around most of the world are at zero. Strange days. Below is a video from the CIO at Saxo Bank that seems to be in my camp but he admits that there are just as many thinking they will keep “patients” because data has been crap as there are thinking they will drop it because they are stuck in a corner. Enjoy.
EUR/USD Head Fake Before FOMC
The potential head fake we have on the EUR/USD will totally depend on what the Fed does today. If they do remove the critical word signaling the rate hike in June then the EU will tank but there is also potential for this conviction move being true if insiders have leaked something contrary to the big boys. Otherwise the move yesterday dont really qualify as a push and the topping at the next level after conviction dont bode well for an extension to the upside. Today I will be more open and look for the extremes for higher probability entries and prefer to just take profits long before the Fed release. The best level to short is at 1.0636 while the best long is at 1.0557 but if it gets that low I would rather be short and taking profit.
GBP/USD Weak Before BOE Minutes
The GBP/USD saw some weakness yesterday,most likely due to the slow down in rate hike threats and BOE Minutes being released today. At this point its still in the third push chop so the safest entries will be 1.4843 for a short and 1.4729 for a long but I will be cautious of a stop run or dip below to last weeks lows while considering a long.
EUR/JPY Holding EU Correlation For Now
The potential for the EUR/JPY holding this tight correlation with the EU has a good chance of breaking down after the FOMC today as the USD/JPY spikes. Having said that, for now it will likely hold it and the best way to treat this is the plan has broken down so I will be more open looking to trade it short from 129.03 or long from 128.15. The 128.40 level is valid but much higher risk with the Fed meeting later today.
Forex News Today
The only significant data before the FOMC today is from the UK with Unemployment data, Earnings Index and the BOE Meeting minutes. We shouldnt see much from these unless they have a big surprise. Earnings could get them moving on a big improvement and since the rate hike talk has slowed the votes arent likely to have changed. Therefore the higher probability is they wont push from the chop until after the FOMC
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