Forex Day Traders’ Playbook: Near Term USD Outlook, Trades After GDP & FOMC Reports

Key facts, trade strategy, and ideas for trading the EURUSD, USDJPY, GBPUSD, and USDCHF. A short guide for beginner intraday and short term USD forex pairs traders. Key facts, trading strategy, including risk management tips

• Following Wednesday’s 2 huge USD events, GDP & the FOMC statement, the USD & its major pairs offer worthwhile  short term opportunities
• Simple short term EURUSD, USDJPY, USDCHF, GBPUSD trade ideas in coming days for newer forex traders
• Why Friday’s events necessitate careful risk management and how to keep loss risk low

The two biggest events for virtually all major global markets, (particularly currencies) for the week have been:

US second quarter advanced GDP: It gave us an overall reading on the US economy and thus potentially influenced the timing and amount of the coming US rate hike. It came in worse than expected, lowering hopes for a June rate hike and thus causing a drop in the USD from which the dollar has only partially recovered as of early Thursday GMT.

The FOMC statement: This gave us the latest clues about the Fed’s view of the US economy and thus the likely date of the first rate hike. As we predicted at the end of yesterday’s post, [link] the Fed’s outlook remains fundamentally unchanged. It believes that, just as this time last year, the recent early year weak data is just temporary “noise,” reflecting brief one-time events like the West Coast port strike. No change in market outlook on the coming Fed rate hike timing. The USD recovered some of its earlier losses from the poor advanced GDP reading, because was bullish news for the dollar. Few really expect US interest rates to rise in June, (most believe it’s coming sometime from September to December), but the Fed didn’t rule out that possibility either.

Given Thursday’s lack of market moving events of a similar magnitude, how to trade the USD in the days ahead remains the big story, so we MUST follow up on our April 29 article on trading the market reaction to Wednesday’s big news with this one on trading the continuing reaction in the coming days for some of the major pairs like the EURUSD, USDJPY, USDGBP, and USDCHF.