What is special about this date and time, one may wonder.
It is that on March 20 at 18:00 GMT the results of the Federal Open Market Committee (FOMC) meeting will be announced.
Research on the US dollar exchange rate movement revealed the currency's tendency to decline 36 hours ahead of the announcement of the FOMC meeting results. The most successful pairs in this regard were EURUSD and GBPUSD.
For example, 36 hours before the end of the Fed meeting on January 31, the EURUSD gained 0.3% (321 pips), while the GBPUSD rose by 0.2% (251 pips).
The following factors also support the weakening of the US currency:
1.The approaching start of monetary policy easing in the US, expected in June. And the recent slightly higher than expected inflation data is not likely to change the Fed's stance. Yes, the market's expectations have somewhat weakened. But according to LSEG, there is still a 68% probability of a 0.25% key rate cut in June. Before the release of the inflation report, it was 72%.
2. Growing budget deficit in the United States and rising government debt. The Congressional Budget Office is calling attention to the severity of the economic risks. According to their estimates, the national debt will reach 106% of GDP in 5 years and increase to 116% of GDP in 10 years. This highlights the significance of the country’s debt management problem.
3. Persistent recession risks. The head of JPMorgan Chase sees a probability of recession in the US at about 60%. In his worst-case scenario, the country might face stagflation.
Moreover, the CFTC data show a growing popularity of the euro and the British pound sterling.
Trading plan
1.Buy EURUSD on March 19 at 06:00 GMT.
Close the deal: Take Profit 1 = 1,0915, Take Profit 2 = 1,0950.
Or exit the market on March 20 at 17:59 GMT.
Stop Loss should be placed below the low of March 18, or below the support at 1,0860.
2.Buy GBPUSD on March 19 at 06:00 GMT.
Close the deal: Take Profit 1 = 1,2750, Take Profit 2 = 1,2775.
Or exit the market on March 20 at 17:59 GMT.
Stop Loss should be placed below the low of March 18, or below the support at 1,2720.
May fortune and success be with you!
This content is for informational purposes only and is not intended to be investing advice.
