Fed non commital to the interest rate hike has just sparked the next round of currency war which we have been seeing of late. The US Dollar Index traded lower at the anoucement of Yellen and the selloff continued to the next day making a low of 94.06. That move spooked many as traders are thought not to catch falling knives type of price action.
I agree that a non hike dampens my view of my USDX buy. I exited all my buys at 95.20 and issued buy calls at 94.62, 94.15 and 93.71.
On FOMC day I issued a notice to remove orders at 94.62 as I could not find any compelling reasons to convince me that the FED would be hiking rates in September. The trade call were for traders who traded bigger lot sizes and could not stomach moves temporary going against them.
As soon as Fed announced its decision, there were rumblings from the ECB that they would be extending their Quantitative Easing. This means a lot to the Dollar Index wiht Euro contributing roughly 56% of it. The fact that Goldman Sach and Morgan Stanley giving bearish views to the Euro fuelled the Euro Sell and USDX buy even more.
Recently we had Denis Lockhart (CEO of Federal Reserve Bank of Atlanta and a Fed Voter) who has been sitting on the fence about a rate hile coming out indicating that he still expects the Fed to raise rates this year.
Conclusion and trade plan:
1) Buys were triggered at 94.62 and 94.15 as price recorded a low of 94.08. Currently we are very much in the money with prives recording at 95.97.
2) I will shift stops to trail as prices moves higher.
3) I am targeting 105.00