On March 21, 2018 the FED increase their overnight interest rate by .25% to 1.50 – 1.75. This made the DXY, which is the US dollar index, to depreciate from 90.37 on March 20 to 39.40 on March 22. At the moment Tuesday, April 10, 2018, 6:05 EDT, the DXY is at 89.62, almost one whole point lower than before the FED interest rate decision. This is an indication for the time being, the DXY will have a higher probability of depreciation than appreciation. This is because even with an increase in the overnight interest rate, a fact that tends to appreciate the currency, it created the opposite - a depreciation in the US dollar. This pattern is expected for the next interest rate decisions by the FED if the FED keeps their three rate hikes for 2018 plan. The next FED interest rate decision is May first. This gives the month of April a high probability of US dollar to depreciate and because the previous FED interest rate decision created a depreciating signal there is a high probability the next interest rate decision would be the same. That is if the FED decides to increase their interest rate in May which they may not. Thus, creating another signal for depreciating US dollar. This type fundamental indication creates a depreciating US dollar trading strategy.

Security markets across the world have been in a correction. With the S&P 500 dropping from 2,762.13 on February 2, 2018 to 2,613.16 April 9, 2018. Also, The Nikkei 225 has drop significantly since the start of 2018 as well as FTSE 100. When a correction occurs the money from the stock markets tends to get converted to US dollar, which is seen as a safer asset than stock. The US dollar is also easier to convert to other asset in the world because of general acceptance by people. This are factors of appreciating US dollar, but the DXY and currency pairs like AUD/USD have not shown that.

For pairs like the AUD/USD a bull technical pattern is forming and fundamental indicators like no FED interest rate hike in April supports the upside pattern. The DXY has also been having trouble breaking the 90.00 mark and AUD/USD has created a channel seen bellow on the weekly AUD/USD. This would be a good point to enter a long position trade for AUD/USD, because there is a higher probability the AUD/USD would go up given the factors mention above.