USD weaker and then stronger based on Fundamental news?

Trading Discussion News and Economy
1

Hiya

First of all I am new to forex trading but felt I would put the post in this forum as it’s related to a Fundamental question.

This morning I was reading up on some news coming into the wires (from around 6.30am ET) A lot of news was about Summers not being in the running for Fed Chairman and likely to put pressure on the USD , whilst lifting the Stocks and T-Notes.

I looked at the charts and as it suggested from around 6.45am to around 9am ET the 15-min charts for both GBP/USD and EUR/USD showed the USD weakening. Was it all down to this news of Summers, or or technical analysis?

GBPUSD-m15-16thSept.jpg700×291 24.3 KB

EURUSD-m15-16thSept.jpg700×299 28.2 KB

My next point was at 9am you can see the price drops in these charts and the USD strengthens. As the US comes online, I would have thought this news would have carried on throughout the morning in the US at least but looking at the charts you can see from 9am on both the GBP/USD and the EUR/USD the USD Strengthened. I’m trying to find news on what could have cost this drop? or maybe it wasnt a news article that dropped this price?

Any thoughts?

Again I’m new to this and trying to find if Fundamental is the way forward or Technical analysis which drives the prices. I know most will say “it depends” but I’d still like to hear peoples thoughts on the charts I have shown above and how it flips on both charts at 9am and if there was any fundamental news causing this.

2

Hi, Vinny. Great questions.

  1. Forex Gump has written an article on why Summers’ withdrawal was good for stocks and bad for the dollar (Lawrence Summers Is Out of the Fed Race! | Forex Blog: Piponomics).

  2. Based on the timing of the USD strength on your chart I can only assume that it’s from the better-than-expected US industrial production report. It could also be profit-taking for those who sold the dollar in the earlier trading sessions.

  3. You’re right, the importance of fundamentals or technicals depends on the theme dominating the markets. Many traders use fundamentals for their biases and look at technical levels for entry/exit strategies.

Hope this helps.