Whats important here is not what the current interest rate is because the market has already priced that rate in.
- When Powell Speaks Tomorrow he will indicate what the fed is likely to do in the future. Will they "CONTINUE TO CUT" interest rates or did allow the economy to correct itself. Continue to cut interest rates would result in a nose dive on the "DXY chart" because lower interest rates lead to higher .
- If this is the case across the board the best currency pairs to sell are "USDSEK" its currently approaching monthly highs and dovish news could cause that pair to fall.
- EUROUSD will have an excellent chance for a long position.
- AUDUSD will enjoy dollar weakness as the china trade deal negotiations have been affecting its economy.
- GBPUSD should receive a short term bounce to the upside.
IT IS IMPORTANT THAT WE THINK OF "TIME" instead of "levels of resistance" on those currency pairs you decide to sell. The United States Dollar is one of the leaders in terms of index strength. Expecting the dollar to remain weak for a long period of time is a questionable decision. These sells will not be long-lived. They will most likely last until the end of the week. The United States will release NFP on August 2nd and based on the economic growth from the booming economy we expect positive numbers.
The Case Of A Strong Dollar /b]
In order for the dollar to maintain its current dominance of the market the fed need to do two things.
1. Make a valid point that the interest rate cut is insurance to prevent our economy from falling like in 2008
2. That we will not continue cutting rates in 2019.
Donald Trump has already insisted that the FED cut rates by 0.50 instead of 0.25. With that being said, Powell has decided to continue with the 0.25 according to his recent speeches. While some board members think they need cut rates down to 0.50. I believe this will be fuel to the fire to continue cutting rates. Powell will bring all these options to their attention as he is not one to leave any information unsaid.
So in this case of a "Strong Dollar"
Sell: EURO USD
Do not trade: USD/SEK (Placing a buy on a pair that's making all-time highs is not the best technical move)
Buy: USD/AUD: (China trade deal sell-side pressure and strong united states dollar)
Buy: USD/NZD: ((China trade deal sell-side pressure and strong united states dollar)