Without a doubt, week of March the 20th was dominated by Federal Reserve meeting. Not able to cut rates any more and still looking for ways to move sluggish economy, FED acted in a strong fashion. FOMC decided to flood the market with liquidity by buying $300bn of long-term Treasuries. It was a far more aggressive move than most observers had been expecting. It resulted in dollar putting in its worst performance for almost 25 years this week. Immediately following the announcement, USD lost about 500 pips against Euro and corresponding values towards other currencies. The aggressive move by central bank diminished USD appeal as a safe heaven currency in time of turmoil. Strong reaction to news indicated that market participants don't like the fact that central bank is, in fact, printing money, as opposed to creating wealth.
Taking a step back, though, FED's action is not really any different than what we have seen from other central banks lately. Quantitative easing policy is already pursued by the Bank of England, the Bank of Japan and the Swiss National Bank. With this in mind we believe that, in a short term, USD downside potential is limited, and, in fact, might have been reached already. More about it at the bottom of this page.
How did our services perform during this turbulent time? Both of the publicly available systems made gains and re positive for the month of March. Please see the results below and follow the link for details.
(Sunday 03.22.2009.)
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Here are the results for last week:
- Daily Pound made 49 pips ;
- Daily Euro gained 96 pips;
Follow the link on the right to view details.
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Last week's results.
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Last week we suggested a sell in EUR-GBP. Set up was to get in at 0.9160. Market reversed as soon a the order was executed and we closed the trade at 0.9209, for a loss of 49 pips. Currently we have another pending order at 0.9350 with a target of 0.9250.
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After the excitement of last week, this coming one might seem a little dull, but in our view volatility will remain high. After few hugely loosing session dollar could be ready for some rebound, although major shift is very unlikely. And with Yen undergoing weakness of its own, USD-JPY is our choice for a possible trade.
Our plan is to buy USD-JPY at 96.75. Target of this trade is over 100 pips, to about 98.15. Fairly large move for this time frame.
We wish everybody great trading week!
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Once again we must stress that the trades highlighted here are only a small sample of our trades. If you have any comments or would like to obtain more information please contact us at info@spectrumforex.com .
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Risk disclaimer:
Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets. Don't trade with money you can't afford to lose. Nothing in our website shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.
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