The Federal Reserve is the organization that sets the interest rates for the United States and to some extent, for the entire world as well. Interest rates determine not only how much you can earn from your savings accounts and money market accounts, but more importantly it determines the cost of borrowing money. For this reason the entire world takes notice when there are announcements coming from the Federal Reserve, especially if this sort of announcement pertains to interest rates.

If you know anything about the foreign exchange market then you might begin to see how a significant announcement like this can impact the value of the United States dollar in the global currency markets. If you are a currency trader that trades certain major curreny pairs such as the EUR/USD then an announcement from the Federal Reserve presents a potential trading opportunity for you to place a profitable trade.

Trading the news in this way falls into a category of market analysis called fundamental analysis, which has to do with examining the overall economy and macroeconomic trends and data in order to try and predict future price movements. There are also many important economic indicators that are released on a predetermined schedule which many traders will also focus on when making their trading decisions.

The key to placing profitable forex market trades based on information or significant announcements coming out of the Federal Reserve is to first get the information as quickly as possible, and then figure out what that information means for the value of the dollar. If you have a particular currency pair that you prefer to trade then you will need to determine which direction you want to place your trade in and how long you want to keep your trade open.

In currency trading the way that you earn profits is that you try to earn as many price interest points or pips as possible on each trade, and because Federal Reserve announcements are so significant and they have such a big impact on the global economy, this presents a rare opportunity to go for the big trades of 100 pips or more in a day. It is not only the announcements regarding interest rates that present a good trading opportunity, but there are many other smaller announcements from the Federal Reserve that traders can use to determine the direction in which they should enter the market in order to increase the probability of placing a profitable trade.

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