USD Interest Rate Hike

[fxscalper90]

Originally Posted by DrForex

olimits7

The question is why did you think "USD will weaken on rate increase"?

There is no simple answer to the question how intra day intra week currency prices react to these types of "fundamental" events.

To underst this you have to be able to read the complete story line pick up on the short term "sentiment". Reading the storyline is like watching a soapie. You don't have to watch everything but you can't afford to miss certain episodes.

Some of my subscribers actually thought I made a mistake when I made this call around London opening:

drforex > I think some more downside today tomorrow before somewhat of an uptick in currencies before easter weekend wednesday NY Thursday
:drforex > that if fed make 25 points leave 'measured' in place or slightly adjust it

The point is that to do complete analysis what i call relational analysis (or realtime analysis) you must consistently relate price ( price movement) time (elapse of) events (discounting of). If you do this well you are much less surprised by "funny" market moves.

Then coming to think of it I actually mainly based it on :

:drforex > OK based on very rudimentary application of fractal geometrics today is likely to be also pretty volatile
:drforex > i.e big moves in this case probably further south ...

Good call Doc. I especially like the "likely to be also pretty volatile..." remark.

fxs

[fxscalper90]

Originally Posted by Nonpiker

Inflationary pressures also could lead to US treasury liquidation due to the fact that holders feel the Fed is behind the curve. This is anything but dollar positive. The initial move was to buy dollars but we will really need to see how the debt holders react. Just remember the first reaction is not always the right one...

This is definitely true.

As was seen in the EUR/USD 4-month 1600-point super spike last year. It then did a whoops-retracement of 900 points then a screwed-up-again-climb back numerous hundred points now this latest we're-big-money--just-don't-effin-get-it-backpedal circus drop of 5 cents.

All is fun in war love though right guys?

The Scalper

[GoldChild]

Just remember interest rates are (usually) put up when inflation rises. Price rises can be caused by increased dem economic activity higher interest rates help slow this down but inflation can also be the genuine weakening of the currency. A rise in interest rates may not always compensate for a weaker currency it might still weaken further. When this happens in the US it will be a sign of genuine inflation the dollar will really be in trouble.

[fxscalper90]

Originally Posted by GoldChild

Just remember interest rates are (usually) put up when inflation rises. Price rises can be caused by increased dem economic activity higher interest rates help slow this down but inflation can also be the genuine weakening of the currency. A rise in interest rates may not always compensate for a weaker currency it might still weaken further. When this happens in the US it will be a sign of genuine inflation the dollar will really be in trouble.

Hm... interesting concept GC.

Is this going to happen?

fs

[jasperforex]

The Fed underlined it's fear of inflation creeping in that's what caused the reaction on the day. But in the days leading up to the rate decisions carry trades were already in the process of being unwound the dollar was riding on the crest of a wave so really you can say the market took the path of least resistance.

[fxscalper90]

Originally Posted by jasperforex

The Fed underlined it's fear of inflation creeping in that's what caused the reaction on the day. But in the days leading up to the rate decisions carry trades were already in the process of being unwound the dollar was riding on the crest of a wave so really you can say the market took the path of least resistance.

Hm... so is it possible to know where EUR/USD is headed in like the next month? Week? Two months?

The FX

[happy99]

I read a newspaper article that say that when Fed raises rates trouble usually follows.

[fxscalper90]

Originally Posted by happy99

I read a newspaper article that say that when Fed raises rates trouble usually follows.

*makes note to build that into my forex trading system*