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Could a 'Hawkish Cut' Lead to the Next Major $USD Rally?

Posted by Mark Meadows, TopstepFX on July 29, 2019

In November 2017, the Bank of England hiked interest rates for the first time in 10 years. The market dubbed that a “dovish hike,” encapsulating the idea that though the BoE hiked interest rates, it provided forward guidance that made it very clear it would not be hiking in the near-term future. Then, Brexit uncertainties grew and the BoE has not hiked interest rates since.

Right now, the market is high on euphoria around the Federal Reserve lowering interest rates. But what happens when it’s a hawkish cut? The Dollar gets sent on its next leg higher, that’s what.

Our base case: the Fed rate cut will be the impetus for the Dollar to strengthen—maybe not immediately, but in the days and weeks after.

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Topics: US Dollar, EUR/USD, Currency Pages, trading strategy, TopstepFX

What’s Next for the Buck after Dollar Spikes on Jobs Data?

Posted by TopstepTrader on July 09, 2019

The Dollar lit up like a roman candle after the July Fourth holiday. The currency benefited from a stronger-than-expected June jobs report, and its move comes just two days after President Donald Trump suggested that the United States should begin manipulating its currency to better compete with China and Europe.

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Topics: US Dollar, EUR/USD, economic data, USD/JPY

Dollar Dips as Pound and Euro Rebound

Posted by TopstepTrader on June 19, 2019

The Dollar is giving back some ground against the Euro and the British Pound after several weeks of gains. The trend reversal comes as global Central Banks adopt a more dovish tilt, while Brexit uncertainty clouds the U.K., and as President Trump steps into the currency debate.

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Topics: Forex, US Dollar, Euro, EUR/USD, GBP/USD, economic data reports

Euro Holds Support in May, Set Up for a Big Move in June

Posted by TopstepFX on June 04, 2019

The Euro is seeing strength and making a run past 1.12 against the Dollar to start the new trading month. The uptick comes after seesaw action during the month of May and as focus turns to the next European Central Bank meeting on Thursday. A big move is expected, and traders will be watching for a break of the recent downtrend for signs that a reversal is underway.

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Topics: Euro, EUR/USD, TopstepFX, European Central Bank

Euro Sinks: Here's What to Watch For Now

Posted by TopstepTrader on April 24, 2019

The Euro fell to fresh one-year lows against the Dollar as key support levels gave way Wednesday. Weak business confidence data from Germany added fuel to the latest drop in the Eurozone currency and now focus turns to Friday’s U.S. Gross Domestic Product report as the next potential catalyst for the greenback.

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Topics: EUR/USD, economic data reports

EUR/USD: Will the ECB Meeting be the Impetus for the Next Move Lower?

Posted by TopstepFX on April 08, 2019

Euro bulls have had little to cheer about lately. After losing 4.5% to the Dollar in 2018, the currency is again facing losses in the early parts of 2019. In fact, the 2% drop in the first quarter was its worst in four years. EUR/USD is now facing an important test heading into the next European Central Bank meeting this Wednesday, April 10. 

Will this be the impetus leading EUR/USD on it's next leg lower?

 

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Topics: Euro, EUR/USD, Currency Pages, TopstepFX, European Central Bank

Huge Week for the Dollar with Key Data Due Early April

Posted by TopstepTrader on March 31, 2019

The dollar rally faces a test as the first week of April brings a flood of economic data. Take a look at some (certainly not all) of the key statistics due out Monday through Friday:

  • Monday: Retail Sales, Manufacturing
  • Tuesday: Durable Goods
  • Wednesday: ADP jobs
  • Thursday: Jobless Claims
  • Friday: JOBS, JOBS, JOBS

With the U.S. Dollar posting its best monthly gain of 2019 in March, surprises or disappointments in the data will help traders determine whether the rally has legs.

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Topics: Forex, US Dollar, EUR/USD, economic data reports, TopstepFX, USD/JPY

EUR/USD at Huge Inflection Point: Reversal Imminent?

Posted by TopstepTrader on March 21, 2019

Did you see that move in EUR/USD yesterday?

Since hitting a low in early March, EUR/USD has been on a tear, gaining eight out of 11 trading days. Heading into yesterday's Federal Reserve meeting, that put the price pushing up towards some critical resistance.

To make things more interesting, the FOMC went ultra-dovish in their statement, backing away from any interest rate increases in 2019, downgrading the outlook for growth and setting an end date for its quantitative tightening. That hit the U.S. Dollar hard and has EUR/USD threatening to reverse a year-long downtrend. Let's take a closer look.

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Topics: Forex, EUR/USD, Currency Pages, TopstepFX

Patience Pays: How a Funded Trader Cashed in on a $2,700 Trade

Posted by TopstepFX on September 26, 2018

Imagine being in one trade over four days, watching your P&L go up $1,000 to even, back to up $1,000 to even as the market gyrates 40-50 pips over hours. Your long bias is still valid, so you sit in the trade, waiting for things to play out.

To compound matters, add that the last time the market did this, it was a false breakout that caused you to lose some money.

That's the scenario that Gabriele T. from Italy found himself in last week when he was long EUR/USD after it broke out above 1.1650. Yet Gabriele was able to be patient and let the trade work out, a decision that ultimately helped him profit $2,700. 

In this week's The Trade, we break down the market setup and what Gabriele did so right. 

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Topics: Performance Coaching, Trading Basics, Forex, EUR/USD, Trading Setups, The Trade, TopstepFX Funded Traders

The 3 Largest Risks to the U.S. Dollar Rally

Posted by TopstepFX on July 25, 2018

“The EU is in an existential crisis. Everything that could go wrong has gone wrong.” - George Soros, May 29, 2018

Populism and anti-EU sentiment. Trade wars. Brexit looming. The global fundamentals underlying every major currency pair is on shifting sand — all the while interest rates are normalizing.

But in this environment, the U.S. Dollar caught a bid. Since highs above 1.25, the pair shed 6%, briefly breaking below a long-term trend line that supported price during the 2017 rally (red line). Right now, the pair is consolidating between the August/September 2017 high near 1.21 and the October low, at 1.1550 (black lines).

While I tend to believe the EUR/USD bounce appears temporary, with expectations that the market will head down towards 1.13, I think it’s always important to look at the opposite case.

For the U.S. Dollar bulls out there, here are the three biggest risks to continued Dollar strength.

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Topics: Trading Basics, Forex, EUR/USD, Currency Pages

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