Today Is A Day For Trading The USD

If you're a binary options trader that likes to focus on currency pairs, you're in for some fun Wednesday. As you know, one of the biggest factors in the movement of currency pairs is the economic outlook in the nations represented by the pair. On Wednesday, a huge piece of economic news will come out with regard to the United States. The Federal Reserve will be making an official statement with regard to interest rates. So, today, we'll chat about what's going on with interest rates, what we can expect from the Federal Reserve, and how we can expect the market to react to the statement made by the Federal Reserve.

What's Going On With The Federal Reserve & Interest Rates

During the depths of the financial crisis felt in 2008 and 2009, the Federal Reserve reduced their interest rate nearly to zero in an attempt to stimulate economic growth in the United States. When the Fed made this move, it was clear that the low rates couldn't last forever. When economic conditions improved, the interest rate would have to go back up. However, the Federal Reserve hasn't been very fourth coming with regard to when they plan to increase interest rates. Nonetheless, with the economy improving at a faster than expected rate, investors feel as though it's only a matter of time before the rate hikes start.

What We Can Expect To Hear From The Federal Reserve

Although it's not likely for the Federal Reserve to come out and outright say that they plan to increase rates in June, there are key hints that they will most likely provide. One of the most important revolves around language. Most experts are expecting the Fed to avoid the use of the word “patient” when talking about their plans to increase rates. This would insinuate that the Federal Reserve is likely to increase rates.

In this particular case, I think that's exactly what we're going to see. The reason is simple. As mentioned above, we all knew the low rates couldn't last forever. As soon as the economy is strong enough to stand on its own, the interest rates will go through a process to be increased to normal. Well, if you've been paying close attention to economic data in the United States, it's easy to see that the economy is strong enough to stand on its own.

How Currency Pair Option Traders Can Take Advantage Of The News

When the Federal Reserve releases their statement, if they insinuate an interest rate hike, chances are the market will react and USD currency pairs will show strong downtrends as the value of the United States dollar adjusts. On the other hand, we can expect the exact opposite movement if the Federal Reserve were to insinuate that the low rates are here to stay for a while.

Knowing this, currency pair option traders have the ability to follow the trend closely and capitalize off of the movements. All they need to do is make sure that they are available for the Federal Reserves official statement!

Final Thoughts

This week is sure to be exciting if you follow movements in the values of currencies! While I think the Federal Reserve will start positioning for a rate hike and the value of the United States Dollar will fall, only time will tell what actually happens! What do you think we'll see? Let me know in the comments below!