Looking at the session for Wednesday, we believe that without a doubt the entire world will be focusing on the Federal Reserve. There is an interest-rate decision, which we do not think will provide much in the way of volatility, but most certainly the statement will. People are wondering whether or not the Federal Reserve is getting closer to raising rates, and if they do that of course would be good for the US dollar, not to mention the fact that it would more than likely have some type of effect on the stock markets.
We believe that the S&P 500 is a market that we should be buying calls in on dips, and also recognize that today could provide one of those. We believe that the market goes to the 2000 level, but that being the case we are still bullish and have no interest whatsoever in buying puts.
Gold markets did almost nothing during the session, and we anticipate that’s probably due to the fact that we have the statement coming out today. If it does in fact look like we are getting closer to interest rates being hiked, gold markets will almost certainly fall at that point in time and have us buying puts, well below the $1220 level. On the other hand, if it looks like the Federal Reserve is going to see alter easy, it’s possible that we could see a call buying opportunity.
Looking at the EUR/USD, we still believe that the area between the 1.28 level and the 1.30 level is massive resistance, and we would not hesitate to buy puts on resistive candles. In fact, that’s exactly what we are waiting for and today could be the catalyst for just such a move. We believe that ultimately the US dollar will continue to be the favored currency around the world, unless of course the Federal Reserve completely shocks the market today.