Fed Turns Up The Hawk
USD bulls were not left disappointed by last night’s FOMC meeting. The Fed satisfied hawkish expectations, noting that “it will soon be appropriate to raise the target range for the federal funds rate”. With tapering of QE due to end by early March, the market expects the Fed to lift rates at that month’s meeting with Powell himself noting during the post-meeting presser that members are “of a mind to do so”.
The greenback was firmly bid in response to the meeting with the Market now fully pricing in a March hike and upside risks starting to grow. The Fed is currently projecting four hikes this year though some players already suspect it might end up being as many as six. With this in mind, incoming data will be key to mapping the USD move over coming months. If the December/January omicron dip proves to be short-lived, this should keep USD upside intact near-term.
Technical Views
DXY
The Dollar Index is currently tracking the second scenario mapped out. The breakdown below the consolidation block between 95.83 -97.08 saw price trading lower to test the bull channel low and structural support at the 94.63 level. This region saw strong demand with price subsequently turning higher and now fast approaching a test of the 97.08 highs. A break here will put focus on 97.90 next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.