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Originally Posted by olimits7
One thing I don't underst since the USD interest rate increased why did USD get stronger? I thought when interest rates increase the USD would weaken. Can someone please explain this?
Thank you
olimits7
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Well in this case Olimits7 I think it may have been a combo of things.
One in theory raising interest rates will control inflation - that makes a nation's economy better to possibly invest in.
Two as in my case owning a short EUR/USD trade I am now
drawing interest on the instrument against the euro.
Think about it would you rather have a buy EUR/USD trade (where you PAY interest) or have a sell EUR/USD trade in which you EARN interest?
There are a couple other items that took almost 5 cents of steam out of EUR/USD since March 13th though but all combine to indicate buying/owning USD may be a less stupid course of action... for at least a few days anyway.
By the way for those 'forex experts' who are advising people to "buy euro on dips"... I don't call a
500 point drop in 10 trading days a "dip." (see attached chart) For most who are following your advice buying euro on dips I'd call it a "wipe out." Maybe even "blown accounts."
fxs