Talking Points:
• The USD's eight-month bull trend leveraged a one-sided position that would be flushed Wednesday
• While the FOMC solidified the potential for a June hike, the Dollar was found too hawkish
• EURUSD surged over 400 points on record volume, but is this a volatile correction or a trend change
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The FX market was roiled by the Fed. While much of the FOMC's policy decisions and sentiment would fall in line with what was expected, the speculative ranks found that the USDollar was over-levered heading into the event. Compared to Treasury Yields or Fed Fund futures, the Greenback seemed to be pricing in far more than a 'mid-2015' rate hike and a measured pace of tightening thereafter. Recognizing the disparity after the central bank clarified our path, Dollar longs looked to lighten the load. The subsequent squeeze in long interest led to an incredibly rapid decline for the benchmark currency that translated into moves like the EURUSD's 400 pip rally and the largest intraday volume (5 yards in less than four hours) on record. Should we be on the look out for another shock move in the Dollar? Is this retreat the start of a lasting trend? We discuss that in today's Trading Video.
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