The Fed officially caved in, and Powell declared defeat by signaling rate cuts coming in 2019, despite not cutting rates in the June meeting – writes chief analyst at Legendary Trades for FX Magazine Opinion
To be honest, I wasn’t expecting for Powell to cave in this easily, I was expecting that he would reiterate his ‘patience’ stance, but I guess t he pressure from the White House got to him.
This is why I went short on Gold the other day just before the FOMC thinking the Chairman will reiterate his ‘patience’ stance. But he didn’t, Gold surged, I lost around 100 pips. That’s perfectly okay, I get it, it’s part of this job. But what I didn’t get was some of my followers’ reaction.
As if they were waiting for me to post a losing trade so they can mock and troll me. All I ever did since the inception of this page was to share my knowledge and expertise to help people out as much as I could. But seeing how some people reacted (very insignificant small percentage of you) makes me think how sad they have to be to post and send hateful comments. If you don’t like my trades and analysis, PLEASE do me a favor and unfollow me.
Now let’s get back to business, the Dollar’s bullish trend which started since the beginning of 2018, was because of Powell’s Hawkish policy. But last week, when he made a complete U-turn and became dovish, it changed everything. The Dollar’s going to fall as market sentiment turned bearish which will lead market participants to gradually get away from the US Dollar. At the end of the day, this is what Trump wanted from the first day he became the President; a weaker Dollar to improve the huge trade deficits, and that’s what he will get.
Technically speaking, the DXY broke below 2 important trend lines on the weekly chart and looking to revisit the long-term trend line which is around 92.
What does this mean?
This means Euro will have a strong bullish move towards 1.18 and possibly 1.20. The Pound will also follow it.
USDJPY will crash towards 100 (read my analysis on my website). And most of all, Gold will FINALLY start its march towards 1600-1700 for starters. Will try to update my views on each one soon. stay tuned.