This trading week started in the same manner like the previous one ended: with the US dollar squeezing higher across the dashboard and with traders being confused by the mixed signals Federal Reserve of the United States (Fed) is sending to markets. One day after Fed decided to leave its key interest rate unchanged, two Fed members held speeches and the tone was nothing but bullish, in the sense that the US dollar has been sent up again as calls for rate hikes were being made again. As a consequence, the EURUSD fell from above 1.1450 after the Fed all the way to 1.1100 in a matter of days and it seemed that nothing can save the pair anymore. However, just like that, bulls stepped up and propelled the pair to almost 1.1300 in what seemed to be a clear Euro move as EURGBP and other Euro crosses were bullish as well.
Confusion on FX markets
To make things worse, the Chairwoman of the Fed, Mrs. Yellen, held a speech on Thursday and if at the press conference following September meeting the tone was clearly bearish on the US dollar, this time she was really bullish, calling for a rate hike this year. Needless to say that the US dollar jumped higher and erased the losses made in the previous days. This is the confusion that reigns in the FX markets these days and I am expecting it to continue until this Fed ambiguity is cleared.
Gold Ripping Higher
If any market is clearer these days, then that is the gold market as it is trading currently above 1140 mark after being aggressively sold in the last period. The move higher seems to be impulsive and therefore I am looking for an aggressive path towards higher values and therefore the bias in trading binary options stays only on the call options side.
USDJPY And 120 Level
There is a clear chemistry between USDJPY and the 120 level and before trying to find a logic it needs to be said that the 120 mark seems to be the line in the send for bulls as each and every time market tried to escape lower, mysterious buyers appear. It is known that USDJPY is the favored bellweather for the US equity markets and its movements are highly dependent on HFT (High Frequency Trading) industry that is actively involved in E-mini’s trading. The move lower from above 125 and all the way to 116 area was not slow, but painful for bulls. However, on the daily chart market formed a contracting triangle that seemed to be broken to the upside and this should see the pair finding some more buyers in the medium term.
Non-Farm Payrolls In Focus
Next week is going to be dominated by NFP (Non-Farm Payrolls) release on Friday and therefore the whole week traders will try to position for the big event. Market participants will look into the release and see if it is strong enough to push the Fed to raise rates at the October meeting and key figures will be the labor participation rate and the unemployment rate. Lately a lot of releases came with revisions, so I would be careful on the actual number and possible revisions as well.
On Wednesday the private payrolls are hitting the wires and we’ll have an idea about how the NFP will look like, but in general expect next week to be a classical NFP week, meaning slow price action for the first part of the week and then an increase in trading activity towards the end.
What To Expect Next
With USDJPY trading with a bullish tone, I am looking for the pair to trade around 123 level sooner rather than later and this is translating into buying call options on each and every dip. It is worth noting that end of month, the 30st of September is coming next week, right in the middle of the week, and trading end of month expiration dates until then is an opportunity binary options trading offers. After that, one month expiration dates will be available and for the medium to long term traders positioning will be key.
I am bearish EURUSD at current levels and looking to buy call options only on a move into the 1.10 area, and even then, will look for an expiration date as big as possible as the pair is forming a contracting triangle on the bigger time frames and it needs time to consolidate. NFP next Friday may be the trigger on the EURUSD bullish scenario. I really like AUDUSD to the upside but until EURUSD is bottoming, it is risky to trade the Aussie pair on the upside as I would rather be on the same direction as both pairs are directly correlated.
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