Seasonal Insights DXY 28.04.21


The Dollar Index is approaching a strong seasonal time of year

Today marks an important day as the FOMC prepare to make their latest interest rate decision. One key risk is that the Fed announce bond tapering today and surprise markets. The result would be strength in the USD.

Now it is also worth noting that May tends to be a very strong month for the Dollar. Over the last 10 years, the USD Index has risen a total of nine times out of the last ten times. The largest gain was in 2011 with a 4.32% rise. The largest loss was in 2017 with a -2.04% fall.

The key trade here is if the Fed announce bond tapering. This would be the perfect opportunity to go long the USD out of the Fed meeting as sooner interest rate hikes would most likely start to be priced in.

Trade Risks: There is the obvious risk that the Fed does not announce bond tapering at tonight’s meeting.

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