#FedRateCutAffectsDollarTrend The Fed rate itself doesn’t get liquidated because it’s not a tradable asset. However, Fed rate decisions can trigger liquidations in forex markets, especially for leveraged traders. Here’s how: 1. Margin Calls & Stop Loss Triggers • Highly leveraged positions get liquidated when rate hikes or cuts cause unexpected currency movements. • If traders bet on a weaker USD but the Fed hikes rates, USD strengthens, stopping out short positions. 2. Volatility Spikes During Rate Announcements • AI trading systems often reduce position sizes before Fed decisions due to potential spikes in liquidity and spreads. • Low-liquidity periods (before decisions) followed by high volatility can lead to forced liquidations. 3. Carry Trade Liquidations • A Fed rate hike can unwind carry trades, where traders borrow in low-yielding currencies (JPY, CHF) to invest in USD. • If USD spikes too fast, carry traders may get margin calls, leading to more liquidations.