Forex Managed Account News
The US cut another 50bps off the interest rates yesterday, and sent equities soaring, and the dollar took a major hit. Risk-related pairs went through the roof, many of them approaching the 50% retrace on the monthly charts. All eyes are now focused on the GBP and EUR, and looking for these pairs to fall in line with future rate cuts.
Most correlations seen during this credit crisis have been right on spot, but now in reverse. As the equity markets rallied, currency pairs followed suit, and the USD lost a significant amount of ground to most majors.
One chart to print out and pin to the wall should be the USD/CAD performing a leap only seen at the circus. For the time being any shorts (long dollars) will be pushed aside to give room for the strength of this trend.
Traders will favor longs at key level on EUR/USD and GBP/USD as well as most USD majors, and playing a pullback should not be hard to recognize. Keep in mind that rate cuts on GBP and EUR will produce movement but not the same impact as seen on the USD. It now becomes a race to see if these countries can keep up to speed with the US.