Since yesterday, the US Dollar Index has gone from giving signs of weakness to surging strongly to the upside. Despite the DXY failing to meet 91.00, the brief bullishness allowed traders to cash in on shorts for the majors.
One major that saw losses against the Dollar, was NZDUSD. Initially, price action traders were looking for longs as the Dollar was inching lower. But, after yesterday’s market closure, candlestick analysis on the DXY hinted at a potential rally. Later that evening, traders entered intraday shorts for NZDUSD. This trade brought a swift +52 pips through the London session.
There is a swing trade that we feel many traders are overlooking. Since December, GBPJPY has been quietly building a strong uptrend. Price was able to create successive higher highs on the smaller and higher timeframes. Today price has broken the high created in August, suggesting price is looking to move higher. Traders can look to 2020’s high as a target.
Powell’s comments during the FOMC press conference were rather tame and led to little to no reaction in the markets. This may be due to his continued stance on the pandemic and how it still poses a risk to current economic growth. The Fed will continue their accommodating approach until cases drop and more vaccinations occur.