There just seems to be no bottom for the dollar as the dollar index continues to make newer lows. EUR/USD and GBP/USD are touching their multi-month highs while USD/JPY broke support and headed to the 106’s. It seems there is no hope for the dollar until the Fed’s turns a bit hawkish and hint on a clearer plan for a rate hike. It’s a new month next week which means there will be a NFP release. Can a stellar payroll report save the dollar? I have little to no hope.
I tried messing around with longing the dollar because GBP/USD and EUR/USD are at massive resistances. The dollar is weak despite what technical analysis says. I didn’t try to force a trade and watched the dollar bears take over. At this point, I need to observe price action without getting in a trade. The risk and reward is horrible to short the dollar here, while longing the dollar seems a bit too risky.
The dollar stayed in a relaxed mode after a week of carnage. The Yen was the biggest gainer in today’s market when the BoJ announced they weren’t cutting rates. USD/JPY is back at it’s 107.900’s supports but looks like it can get broken soon. The statement was dovish however the bank announced they were in no rush to step in. Oil also made new highs which means the bulls are still in control. U.S GDP came out short of 0.5% vs 0.7% which didn’t help the bearish dollar. Things aren’t looking too good for the dollar…
I gave the benefit of the doubt to long the dollar but ended in disappointment. It looks like the currency is going to head lower until data improves and the Feds bring in the hawks. It was a slow day today which may lead to a dull Friday as well. If USD/JPY continues to go down, I may look into a short while longing GBP/USD if it’s strength continues. For now, I’m very bear on dollar.
The Aussie goes crashing, oil goes flying, and dollar in limbo after a neutral FOMC statement. The bad CPI of -0.2% vs 0.3% for Australia sent the AUD/USD to a major downward spiral. The dollar was also stuck in a limbo-like situation due to some tricky wording. We didn’t get any hawkish clues for a June rate hike, however, the Feds are no longer troubled by global weakness. Although a June hike is less likely, there should be a hike in the upcoming year.
I made a major beginner mistake today and still feel like an idiot for acting so impulsive. My first mistake was trading so soon after a major news release. I longed the dollar perhaps 1-2 minutes after the FOMC statement was released. It’s very unlikly for me to pull the trigger without letting the market digest the news for at least 5 minutes… Long story short, I saw how the algos reacted to the statement and I quickly saw that the FOMC release was more hawkish then dovish. I pulled the trigger on a short GBP/USD and EUR/USD which was followed by a dollar pullback. My stop loss was instantly hit while the dollar continued to move higher few moments later. I got burned by the markets for trading so impulsive. This will never happen again, let’s move on.
FOMC is tomorrow and the markets were still a bit unpredictable to trade correctly. Dollar strength was all over the place with no real direction and the volatility soon dried up after hours. Nothing special today but tomorrow will be the real important day.
My trades overnight on longing the dollar didn’t work out too well. My stop loss were all hit and the market left me no room for redemption. I tried and forced trades which didn’t end up all too well. My losses weren’t too deep and it was expected on a pre-FOMC day.
We all know what happens before a raging storm; peace and quite until all hell breaks loose. Although the “storm” is probably nothing too major, anything’s possible in the world of trading. The market decided to relax and unwind before the action packed week beings. We’ll be hearing from FOMC, BOJ, BOC, and RBNZ with lots of GDP announcement.
I didn’t trade much due to a very thin market. However, I decided to open up a small position on short GBP/USD and short AUD/JPY. The sterling still seems unnecessarily strong while dollar is quietly waiting for the FOMC. I don’t think anyone is anticipating a rate hike this week, however, the tone of Feds will be crucial for dollar’s faith.
Here’s a chart of my AUD/JPY short. It’s on the top channel in a higher time frame while also hitting horiztonal 86.350’s resistance. It’s not a bad R/R to try a short.
The dollar’s strength continued on most pairs except the GBP/USD. Whether it was Obama’s visit to the country or some GDP optimism, the sterling surprisingly stayed strong. This gave the EUR/GBP to continue even lower from it’s peak. Although the dollar has been showing great strength, it’s going to be very volatile next week. There’s going to be an array of central bank meetings, multiple GDP reports, and other data releases. This is definitely going to be a make or break for the dollar; will it make new highs or lower lows? I’ll be very cautious as I trade next week and try not to be so trigger happy.
I didn’t go too crazy on my trades today just a few dollar scalps here and there. Although the dollar’s power is unquestionable, it’s a bit too late for me to jump on the bandwagon. The GDP report and Fed’s tone next week will be very important for the make or break factor for the dollar. All eyes will be on the FOMC release which will determine dollar’s future.
Draghi had an ECB conference where his tone was mostly neutral with a slightly dovish flair. He didn’t mention anything about the dangers of Euro’s strength and the need to push it down but he did say they were ready for any stimulus if needed in the future. Europe’s growth is steady and moderate while inflation remains low, no new news. After Draghi’s speech the EUR/USD had a huge spike down but quickly found support in the 1.2800’s area and plateaued for the remaining NY session. Draghi’s speech wasn’t too powerful to knock the Euro down, however, it didn’t provide any strength for the currency. I’m still convinced it can drop a bit more.
The dollar’s spike wasn’t surprising but happened to quick for me to make any logical moves. I was also very hesitant to make any trades while Draghi was speaking. I was waiting for a pullback that never happened and prices plateaued during the end of NY. Sure I wanted to long the dollar against a multitude of pairs but I wasn’t willing to make any irrational trades. Opportunities will come and rushing trades will only burn my equity. Dollar seems to be pulling back a bit during Asia so I’m sure the market will present more chances on a dollar long opportunity.
The biggest mover in the market was the huge spike on oil. After inventory numbers came out close to expected, oil went on to make higher highs which floats around $44. For a change, the dollar had some signs of strength today and ended up stronger than all currencies except the Canadian dollar, which gained strength from oil. Tomorrow is a speech from the ECB and I am hoping that Draghi can push the EUR/USD down and give dollar some life.
Finally a green day after a week of destruction. The dollar looks like it finally found somewhat of a support, as I mentioned in yesterday’s comment, however, I’m not totally convinced. If Draghi’s speech goes well tomorrow and hints at another stimulus plan, I will have more conviction of dollar’s reversal. Till then, I will be carefully watching dollar’s rally.
There were talks from RBA, BOE, and the BOC today which made little to no affects in the markets. Draghi is speaking tomorrow which makes me wonder if the EUR/USD can finally reverse and fall straight down. Until the macros get figured out, I’ll be patiently waiting for any kind of paradigm shifts.
For today, I lost money on longing USD/CAD thinking oil will come down a bit. Unfortunately, oil continued to strive higher and UCAD took a lower leg. I’ve lost some equity this month trying to bottom pick the dollar. Bottom picking is a nasty business that requires stealth and judgement. One has to be quick to abort positions if wrong and needs to carefully analyze a market bottom followed by a reversal. I’m carefully awaiting the dollar to find support and show signs of a new upward trend. 11737 is the last support I’m seeing, if this breaks, not sure if we’ll see a recovery for a long time. However, judging by the EUR/USD and GBP/USD, I think a dollar bottom is soon to hit.
The Doha meeting that was held on Sunday ended without an agreement between the two revivals, Saudi and Iran. The two countries failed to reach an accord for production control which initially drove oil prices on a massive gap for the market opening. Surprisingly, oil has quickly found a bottom and filled the gap throughout Monday. Although we had a recovery in oil, without production control, I’m very skeptical and have my eyes watching for a USD/CAD bottom.
The dollar continues it’s tumble and my equity follows it’s hopeless direction. My misfortune continues as dollar can’t find a bottom. I guess I’m learning that I don’t perform too well on a bearish dollar. At this point, I’m going to wait until some macro economics reveals in a hawkish Fed or a dovish global bank. There’s going to be some Australian, Canadian and European news tomorrow and hopefully that can change the direction in this falling dollar.