How to take advantage of a Hawkish central bank in Forex trading
A central bank’s monetary policy on interest rates is a key driver of the Forex market.
Here’s what you’ll do:
You’ll find another currency that belongs to a country with a Dovish monetary policy.
Let’s say US’s Federal Reserve is Hawkish.
The US Dollar (USD) will also be pretty strong.
If Turkey’s central bank is Dovish, then Turkish Lira (TRY) will be relatively weaker than USD.
So what does this mean?
USD/TRY will likely be bullish – as you need more TRY to exchange for 1 unit of USD.
This trend will likely to continue for a good number of months before the central banks announce their next major policy decision.
Here are some ways to trade this: