Currency Market Analysis Report - 11/8/18 – The USD Rises On Dec. Rate Increase Expectations
The US Federal Reserve left interest rates on hold and kept the overnight funds rate unchanged at 2.00% on Thursday. It was thought that “Red October” in the equity markets was going to potentially make the US Feds think twice about raising rates in the future, but they said the labor markets remains strong as suggested by last week’s job market report which produced more jobs than expected.
The US Feds have raised rates three times in 2018 and their language suggests that we should expect a fourth hike in December. Nearly 80% of traders expect the Federal Reserve to hike rates in December, according to investing.com
Rising interest rates are great for a country's currency. The US dollar moved initially lower on the news, but then reversed higher ending the up 0.62% to 96.40 by the close of the day. So, where is the US dollar heading next, lets go to the charts?
Monthly Chart (Curve Time Frame) - monthly supply is at $101.50 and monthly demand is $89.50.
Weekly Chart (Trend Time Frame) – the trend is up, but knocking on the door of weekly supply at $97.50.
Daily Chart (Entry Time Frame) – price has been hugging the uptrend line since October. However, one shouldn't go long when price is in the process of entering a daily supply within a weekly supply. The chart suggests to wait until price breaches the $98 level and go long on the pull back or to wait until the daily uptrend line is broken, then buy on the pull back to go short.
NOTE: sometimes the best trades are the ones not taken. As traders we must select only the lowest risks, highest reward probability trades.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas
This is one of those assets that I can’t seem to understand its moves. Given how it is traded relative to other currencies, it is always interesting to see how economic metrics move it while still being so overvalued with the amount of debt the US continues to issue. Its one of those markets that is so difficult to predict!