FOMC, currencies review

As you know, today is the FOMC meeting minutes. This is one of the most important events if you trade fx, US government bonds or US indexes. And even if you don’t trade them, be aware, because the most part of assets will be moving later today.

Let´s start with the interest rate decision.  You can think that this decision doesn’t affect you in your day to day, but this is wrong. It affects to rate that the borrowers need to pay back (mortgages, personal loans, student loans, car financing…), your investments, the asset valuation, the money flow

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Second, all the economic performance and events that affect the economy are reviewed by the FOMC committee and president of the Fed makes public the economic policy that will be implemented in the coming months.

These are simple explanations to clarify why it’s an important event in the financial markets. If you know how to interpret the words of the FED president, you can make good medium-term investments. For example: if the FED raises the interest rate and they expect the economy to keep growing, one of the most successful strategies is investing in financials (banks, insurance companies…) This is not the purpose of this post.

Euro

    Source: TradingView, EURUSD Dec17 futures, daily

This contract was analyzed the other day. It broke the first resistance at 1.18020. The bullish move in the euro is due to the strong German Industrial Production and the deferral of the independence declaration in Catalonia.  If the Fed sends a bullish speech, we can see this contract going down to around 1.1750.

These are the levels  I published in the weekend:

Resistance 3	1.20965
Resistance 2	1.19550
Resistance 1	1.18020
Support 1	1.17235
Support 2	1.15460
Support 3	1.14435

GBP

    Source: TradingView, GBPUSD Dec17 futures, daily

The British Pound has recovered a little bit this week. If we see the news around the UK, we can think that the pound is really high and it should fall. Europe is putting pressure on the UK. There is a substantial probability of a Non-deal Brexit, which would be bad for the GBP. In the other side, we have a strong US economy. I think Yellen will clarify the effects of the hurricanes to the US growth. I think we can see the GBPUSD between 1.3100 and 1.3066 in the coming days.

Important levels:

Resistance 3	1.3615
Resistance 2	1.3283
Resistance 1	1.3153
Support 1	1.3066
Support 2	1.2952
Support 3	1.2848

JPY

    Source: TradingView, JPYUSD Dec17 futures, daily

We can see a bullish trend in the dollar. The shade highlighted in the chart show how significant is the 1.1257 level. I don´t see strength in the JPY movement this week.  A hawkish message can help to consolidate the price between 1.1343 and 1.1257 (0.88160 and 0.88160 in the chart). 

Resistance 2	0.88160	1.1343
Resistance 1	0.88835	1.1257
Support 1	0.89905	1.1123
Support 2	0.90945	1.0996
Support 3	0.92225	1.0843

Trading the FOMC meeting minutes is really difficult. You shouldn´t only consider the interest rate decision. The FOMC minutes can provide you an idea of the path to follow in the coming months. If you do intraday trading, you will see the liquidity disappear and big swings in the prices due to how the traders or algos interpret the message provided by the Fed president.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved