Currency analyst

FOMC minutes: why to watch and how to trade EUR/USD

Today we will get a chance to get a summary of discussions from the Federal Open Market Committee meeting. It will give the market a better understanding of where Fed sentiment stands and whether there will be a rate hike or not. At the last meeting held in September three of the FOMC’s 10 voting members dissented and opposed the final statement (the majority of central bank officials voted for keeping the Fed’s interest rate unchanged). After September’s meeting many Fed’s members in their speeches ahead of today’s minutes meeting reported that they are not against the rate hikes if the data releases confirm the revival of the US economy.

Most watchers believe that there will be a rate hike in December once the storm after US presidential elections dies down. That’s why we see the US dollar is appreciating against other currencies in the course of last trading sessions.

Meanwhile, we decided to remind you of the efficient SEB’s strategy on the release of the Federal Reserve’s meeting minutes.

If EUR/USD rises in the next 3 hours after the FOMC minutes release, the specialists will open long positions, excessively buying the pair, and close it in 24 hours. Alternatively, if EUR/USD declines in 3 hours after the release, sell the pair and hold position for 24 hours.

Last time in August this strategy performed will. The longs on the EUR/USD pair were opened at 1.1286; the signal was closed 1.1354 after 24 hours and the net profit accounted for 68 pips.

"Nooo...I don't want to raise interest rate..."

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