The US dollar opens up this year with strong bullish momentum. This confidence comes after a multi-week slump and several consecutive holidays that slowed down trading activity. As the US dollar is the most traded currency in the world we can see the effects of this bullish momentum throughout currency pairs that feature the USD. Today we will discuss what this new momentum may mean in the markets as well as prepare you for possible trade opportunities that this newfound momentum may offer.
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Why the sudden momentum
We just left the holiday season where there were multiple holidays stacked upon each other. During this moment there are multiple days throughout the business week that are replaced with holidays. This usually means there is less volatility in the markets at that point. This discourages big banks to pour less money into the markets as there are fewer people on the opposite end of their trades to fill their orders. The new year signals an end to that period and hence we can see a resurgence in the market as new interest is building in the market.
The new arrival of the year also signals a new financial year for businesses. Several businesses and organizations plan financial decisions on an annual basis. We should expect to see several major financial decisions made in preparation for the coming year. The new resurgence of interest comes in preparation for the foreseeable rise in business activity.
Another very important factor to consider is the number of important economic announcements to be made this week. From Wednesday we had three important economic new events each day including the all-so-important NFP announcement which is bound to cause the most volatility in the market. To create liquidity the big banks are starting to roll in their manipulations early in the week so we must also be careful as traders to follow strict risk management and not get stopped.
How should we trade？
Be ready for unreasonable moves for the next three days if you are trading any instrument that features the dollar. We should expect to see unreasonable volatility right around New York open for the next three days. DO NOT MISS THE NFP ANNOUNCEMENT THIS FRIDAY, it is one of the most volatile economic events of the month, there is lots of money to be made then so pay attention.
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