Trading ideas: USD on defensive after Fed, EUR/USD long at 1.1785
|The Federal Reserve raised the range for the fed funds target rate by another 25bp to 1.75%-2.00%. The interest paid on excess reserves was lifted by only 20bp in order to bring the effective fed funds rate back to the middle of the target range.
The updated Summary of Economic Projections contained some minor upgrades to the growth and inflation outlook. The main change was arguably the upward move of the 2018 dot. The majority of the FOMC now expects a total of four rate hikes this year (up from three), which is in line with our baseline forecast.
The post-meeting statement contained various wording changes. In essence, they all reflect the Committee’s increased confidence in the economic outlook and the growing conviction that further gradual normalization of the policy stance is needed.
This is how MyFXspot.com trades now:
EUR/USD
Trading strategy: Long
Open: 1.1785
Target: 1.2015
Stop-loss: 1.1680
Recommended size: 1.90 mini lots per $10,000 in your account
Short analysis: The EUR/USD bulls have suffered a setback, as bears managed to register a daily close below the 1.1762 Fibo on Tuesday, 23.6% retrace of the 1.1511 to 1.1840 rise. But the downward move was not continued today. A break above Tuesday’s 1.1809 will brighten bullish prospects.
GBP/USD
Trading strategy: Long
Open: 1.3410
Target: 1.3675
Stop-loss: 1.3280
Recommended size: 1.15 mini lots per $10,000 in your account
Short analysis: Although our long trade was under pressure, long lower wick on today’s candle looks encouraging. We remain long.
USD/JPY
Trading strategy: Await signal
Open: -
Target: -
Stop-loss: -
Recommended size: -
Short analysis: Today's topside rejection ahead of 111 and the May 23 breakdown session high may concern USD/JPU bulls. We stand aside.
USD/CAD
Trading strategy: Await signal
Open: -
Target: -
Stop-loss: -
Recommended size: -
Short analysis: The USD/CAD continues to find resistance near 1.3050. Global/NAFTA trade tensions are still the main risk factors here. We think no position is justified here from risk/reward perspective.
AUD/USD
Trading strategy: Await signal
Open: -
Target: -
Stop-loss: -
Recommended size: -
Short analysis: Today's volatility stopped our long position at the entry level. Today's long lower wick is a bullish signal. If the pair closes above 14-day exponential moving average today, we will get long again.
EUR/GBP
Trading strategy: Long
Open: 0.8810
Target: 0.8930
Stop-loss: 0.8750
Recommended size: 1.87 mini lots per $10,000 in your account
Short analysis: A battle underway with repeated failures just ahead of the 200DMA line, 0.8832 today, highlighted by long upper wicked candles. The daily cloud continues to drag on price despite multiple upside breaks. After volatile week, the momentum is turning bullish. We opened long at 0.8810.
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