Thursday 25 January. Market close.

There was a lot of information to digest from today's market, and ultimately, I couldn't form a strong enough conviction to place a trade.

US GDP was reported better than expected, which in theory is dollar positive and my initial thought was for the USD to be strong and yields to rise, in a good news is bad news scenario ( a strong economy vindicates later rate cuts). But the opposite happened, yields fell and the USD weakened. And at the time, I couldn't find a reason for this (I have since read that the inflation component within GDP was soft and this could explain falling yields).

Ultimately, the USD weakness was not sustained and the dollar ended the day higher. Particularly Vs the EUR, today the ECB interest rate was held as expected, and MS Lagarde says they are not even talking about cutting rates. It is now widely expected the first cut will be in June, which is later than the march date predicted not long ago. This in theory should be positive for the euro, but the EUR weakened. Possibly in a similar fashion as the CAD yesterday, the market is suggesting the ECB needs to cut earlier so as not to risk breaking something in the economy. If that's the case, the EUR could become shortable, but I'd need to see EUR USD break strong 4hr support first.

Today would have been a short term (5 min chart) 'technical indicators only' traders dream. But I've been there in the past and it didn't end well long term. But my policy of only trading movement I understand has kept me out of the market today.

Which leads us into tomorrow, with upcoming inflation data from Japan and core PCE from the US, there may be a final opportunity to end the week.

Please feel free to ask any questions: johnelfedforexblog@gmail.com