Good Day Traders,
With the Fed meeting out of the way, the markets appear to have a fairly clear path moving forward. Despite much chatter about a looming recession, there is not really any evidence to suggest that one will unfold within the year. The most recent Bloomberg and CitiGroup Economic Surprise Index shows that economic growth is rebounding.
Some other macro and quantitative data points are worth highlighting in terms of the growth outlook
Lowering of the Chinese Reserve Requirement - historically bullish for the S&P 500 2-3 months out
Value stocks outpacing Growth stocks recently - historically bullish for the S&P 500 2-3 months out
Sunday/Monday spike higher in oil prices (+20%) points to lower oil prices moving forward. Bullish for the economy overall.
10-year Treasury yields set to move higher after a massive move lower. Oddly enough, bullish for stocks historically speaking
So you might be asking yourself, “Dave, great data points, but these are more aligned with an equity trader.”
Yes, and no. Bear in mind that as an FX trader, you cannot ignore the other related asset classes and the macro-economic and quantitative backdrop. I have never met a successful FX trader who looks solely at charts or just one analysis technique (technicals, fundamentals, macro, quantitative etc etc). It is the successful synthesis of various techniques and inputs that will provide you a complete picture.
So what does that mean for FX?
Weaker Dollar Index (DXY): near-term target of 97.50-96.73
By default that drives EUR/USD higher towards 1.1151-1.1247...
...USD/CHF moves lower towards .9800AUD/USD looks to move higher too - less dependent on DXY - targeting .6922+
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