Hi there
Just a question I've been thinking about.....apologies if it is a basic or laughingly obvious one.
We frequently hear about fx markets 'pricing in' future interest rate changes and the trends which happen as a result. I just wondered whether big players, central banks, market makers etc have notions of what the price/value of a currency should be against another when this 'pricing in' is occuring.......? Is it purely analysis which dictates such things, e.g. a fib level target...? Is it a historical price or big area of S/R......? Is it a historical price when the currency was at the same interest rate level that is now being 'priced in'....? Or is it just a price that people are prepared to pay according to supply and demand................?
Any thoughts welcome
Just a question I've been thinking about.....apologies if it is a basic or laughingly obvious one.
We frequently hear about fx markets 'pricing in' future interest rate changes and the trends which happen as a result. I just wondered whether big players, central banks, market makers etc have notions of what the price/value of a currency should be against another when this 'pricing in' is occuring.......? Is it purely analysis which dictates such things, e.g. a fib level target...? Is it a historical price or big area of S/R......? Is it a historical price when the currency was at the same interest rate level that is now being 'priced in'....? Or is it just a price that people are prepared to pay according to supply and demand................?
Any thoughts welcome