According to a recent Wall Street Journal article, the bottom of the market has been achieved. The U.S. dollar has been falling significantly over the last couple weeks. Over the last trading day, the EUR/USD has gone from trading at 1.1381 to a high of 1.1432. This alone doesn’t mark the end of the trading slump that has been going on all throughout the world, but it does set the stage for more volume in other markets as a cheaper dollar enables more liquidity for other countries.
Other factors, like signs of stability coming from China, are also contributing to the falling dollar. It is more attractive for investors to put their money in when a bottom has been achieved as there’s only one direction that their money can go. If the market really has hit bottom, then we should expect the dollar to drop a lot more in the coming months. However, there’s no clear guarantee that this is truly the case, so be cautious.
There was a presumption that ahead of the Federal Reserve meeting’s minutes being released that the EUR/USD would drop significantly at the start of trading on Wednesday, April 6, but the exact opposite occurred. Instead, the euro picked up momentum and as of the time of writing this, that momentum doesn’t appear to be stopping. It has provided a nice little boost for international stocks, as well, thanks to the fact that American investors can now put their money in foreign stocks without being hit as hard by the exchange rate.
As a currency trader or a binary options trader, you may have entered trading on Wednesday morning with the mindset that the dollar would move upward, but if you did this, you were incorrect and probably lost money as a result of this. Being able to spot mistakes is a big part of being a successful trader. Everyone is wrong once in a while, but the sooner you can stop in your tracks and come up with a way to rectify those mistakes, the more successful you will be. Not only does this help you to prevent further losses, but it gives you an escape plan from the emotional tilt that you are most likely going to experience as a result of unexpected losses. Having a safety net or a backup plan is always a great idea, even if you don’t feel like you will ever need to use them. When you do need them, you will be grateful.
One of the nice bonuses of trading in the Forex or binary options market is that you can still profit off of the downward motion of the dollar. Unlike the stock market, where selling an asset short is expensive, there’s no extra fee for doing this in either of these venues. It allows for an easier strategy change, and it makes it so that you can profit in any marketplace, regardless of whether the economy is doing well or poorly.
Whether this momentum will last throughout the trading week is unclear. A lot of this depends on whether or not the world trading community believes that the Fed really will hold off on a rate hike for the coming months. That decision rests in the hands of a few people, and although there are indications that another hike isn’t in the foreseeable future, that is always subject to change. It’s important to be paying attention to any news pertaining to this, and it’s also important that you are keeping an eye on the sentiment that that news is creating among other traders, particularly the market movers like the big banks.