Forex trade may become range-bound on an intra-day basis as market participants position themselves for the FOMC rate decision, and more importantly the rate statement that will be delivered on Tuesday. There seems to be absolutely no chance of a rate increase from the Fed and that is not what traders are awaiting.
The interest is in the wording of the accompanying statement and whether there will be any reference to quantitative easing, which is a form of monetary policy used by the Fed to control the money supply and addresses the lack of inter-market liquidity that looks to be hampering economic expansion.
Valuing any asset in times of potential deflation is a challenge that few have been charged with, as deflation is not that regular of an occurrence, but in the current market conditions that is what faces automated algorithms that between now and 14:15 ET on Tuesday will battle each other in an effort to gain an edge.
Forex traders will be able to track the ebbs and flows of global trade and trade in-line with whatever is deemed to be fair value, understanding that price action is likely to be packed into 2-3 separate 30 minute candles each day.
Banking early and often will be the mantra between now and Tuesday afternoon. Look to buy the pull-backs on the major currencies, because right now most are overbought against the Usd, and that shortens the odds of success if buying at these inflated near-term prices.