EUR/USD, Fed and Daily Interest Rate Trades

Today’s day trade for EUR/USD will view from Fed and USD interest rates. From an interest rate perspective, the difference between USD and ECB interest rates is zero. Literally zero as both Fed and ECB interest rates contain the exact same information for a day trade. The difference as was seen yesterday was possibly a 1 pip difference but never more than 1 pip.
Second advantage is USD rates are released everyday at 4:15 and this allows EUR/USD to factor 24 hours ahead. The difference between the day trade factored 24 hours prior and today ‘s day trade contains hardly a difference. Difference possibly is 2 and 5 pips.

Overall purpose to trade by interest rates is to trade exactly with perfect entry and exit points. never a loss because trades are given by central banks. Its impossible to lose.

Trade by interest rates eliminates the need to blabber all day about Fed speakers, Option expiries, Liquidity and a long list of worthless pablum. Literally 99% of all information traders are exposed to every day contains zero relevance to a currency or market price. Traders talk about riots moving markets. How much is riots worth to today’s EUR/USD day trade.

As Oscar Wilde stated long ago, we know the price to everything but the value of nothing.

Third advantage is ECB interest rates are released every morning at 6:00 am EST. The day trade is well underway from its 2:30 am starting time and European news is long past and released.

Fourth advantage to USD interest rates is every market price on the planet including stocks, commodities are factored by USD interest rates. This allows for exact trades not only in currencies but stocks and whatever else is traded in combination.
Fifth advantage is traders may enter heavy at appropriate entry points to achieve maximum profits for the day. Entries and exits are entered and traders may walk away for the day as the day is over. No need any longer to ever watch a screen.

Sixth advantage is traders beat any trader on the planet especially those traders using ulterior trade methods. And trade by interest rates allows for a full understanding to what traders are doing and why. No mysteries exist to a day trade price path.
USD VS RBNZ interest rates

No difference exists to interest rates from central bank to central bank as all forecast the same and exactly to all currency prices. The RBNZ is first to release interest rates for the new trading day and RBNZ interest rates factors to any currency price to complete a perfectly successful day trade. The actual difference between USD and FED and RBNZ interest rates is a big fat zero. Using one nation’s interest rates RBNZ or USD and FED allows for quicker time to factor day trades rather than entering every nation’s interest rates per currency.

Federal funds (effective) 1 2 3 0.05 0.05 0.05 0.05 0.05
Commercial Paper 3 4 5 6
1-month 0.10 0.09 0.09 0.11
2-month 0.15 0.11 0.12 0.17
3-month 0.25 0.19 0.15 0.22
1-month n.a. n.a. n.a. n.a.
2-month n.a. n.a. n.a. n.a.
3-month 0.15 0.17 0.17 n.a.
Bank prime loan 2 3 7 3.25 3.25 3.25 3.25 3.25
Discount window primary credit 2 8 0.25 0.25 0.25 0.25 0.25
U.S. government securities
Treasury bills (secondary market) 3 4
4-week 0.10 0.10 0.14 0.13
3-month 0.14 0.15 0.15 0.14
6-month 0.17 0.17 0.18 0.18
1-year 0.17 0.18 0.17 0.17
Treasury constant maturities
Nominal 9
1-month 0.10 0.11 0.14 0.13
3-month 0.14 0.15 0.15 0.14
6-month 0.17 0.17 0.18 0.18
1-year 0.17 0.18 0.17 0.17
2-year 0.18 0.19 0.17 0.16
3-year 0.22 0.22 0.22 0.19
5-year 0.35 0.34 0.34 0.30
7-year 0.53 0.52 0.54 0.50
10-year 0.69 0.68 0.70 0.65
20-year 1.19 1.19 1.23 1.18
30-year 1.43 1.44 1.47 1.41

Yesterday’s Fed interest rate range was 138 basis points and today is 130. A drop of 8 basis points but a meaningless difference to a day trade. Pertinent to the day trade is a rise from yesterday of 2 basis points. This will factor to today’s vital support and resistance points.

EUR/USD support and resistance points today 1.1077 and 1.1091 Vs 1.1165 and 1.1178.

Price path above 1.1134, 1.1141, 1.1147, 1.1156, 1.1169, 1.1176 and 1.1183.

Weekly break point 1.1183 matches to today’s target at 1.1183.

Today’s EUR/USD strategy is short 1.1183 and must break at vital 1.1176 then follow downside points. EUR/USD today traded 1.1188 and a violation of 5 pips. The short begins with 5 pips as extra bonus points.

More to downside points 1.1099, 1.1091, 1.1086, 1.1077 and 1.1071.

Short strategy for today is good until EUR/USD trades to lows then begins longs. Trades end at 10:am EST.


Brian Twomey