Trades of the Day – March 19, 2024

In an unexpected turn of events, the Bank of Japan (BOJ) exited its long-standing negative interest rate policy last night. Contrary to typical market reactions, this significant monetary policy shift did not lead to a depreciation in USD/JPY. Instead, from the time of the BOJ’s decision to the Frankfurt market opening, USD/JPY surged by an impressive 150 pips. Concurrently, the Dollar Index (DXY) experienced a notable rise, moving from 103.55 to 103.85, indicating renewed strength in the US dollar.

Today’s trading session for EUR/USD was marked by significant movements. At 09:45 GMT+2, the pair breached the first support level of the day at 1.08573, signaling a bearish momentum. By 10:30, EUR/USD had descended further, reaching the second support level at 1.08417, which has been a critical support level since the start of the month. The day’s lowest price was recorded at 1.08347, just seven pips below Support 2, highlighting the intensity of the selling pressure.

In terms of trading opportunities, the day presented two potential scenarios. The first was a sell order at Support 1 with a target at Support 2, offering a potential gain of 15 pips. The second scenario was a buy order at Support 2 with a target back at Support 1, also presenting a 15 pips target. Despite the availability of these trades, our strategy led us to participate in only one.

We capitalized on the second scenario by executing a buy order at Support 2 for EUR/USD. This decision was based on our analysis and the belief that the level represented a significant support point, likely to prompt a rebound. This trade reflects our approach to navigating the market’s shifts, particularly in light of the recent unexpected movements following the BOJ’s rate decision.

Today’s trading underscores the importance of staying attuned to global economic events and their potential impacts on currency pairs. The BOJ’s rate hike serves as a reminder of the interconnectedness of global financial markets and the ripple effects that decisions in one region can have across the board. As we reflect on today’s activities, we remain vigilant and prepared for the dynamic nature of the forex market.

Trading our dreams into reality,
Mihai Paul Olteanu