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EURUSD: Rate Hike and The Direction of the Monetary Policy

EURUSD: Rate Hike and The Direction of the Monetary Policy

What to focus on today’s Fed Statement:

FED will raise the rates today. Macroeconomic figures – economic growth, wage growth and inflation- are strong enough and FED communicated it in a clear manner.

The important question is the direction of the monetary policy in the future. Markets will be looking for the hints of the direction of the mometary policy in the future.

Hints for a tight monetary policy will dominate USD. What does it mean? 

If the Fed wants rates to exceed inflation, this will be the tighting monetary policy. More clear; If the gap between higher interest rates and lower inflation is significant, it means tight monetary policy and the Dollar could dominate.

So the fresh dot plot may give the signals of the monetary policy in the future. The other factors in the statement relate to inflation, geowth and employement will have smaller effects.

After the initial rush related to the dot-plot and the statement, markets will wait for 30 minutes until Powell begins his press conference. Powell has tiptoed around sensitive political questions such as trade, but he is indeed not shy about monetary policy. He can trigger another round of volatility in his 45-50 minutes long presser.

Key Levels: 

Upside: We have 1.18500 resistance. Breakout of 1.18500 will carry the pair 1.19500 and 1.20500 midterm.

Downside: 1.17200 is the key support. A firm breakout will lead the pair 1.16500. To talk about a sharp bearish move, we need to see the breakout of 1.15100.

The midterm direction of DXY will be clarified today. Untill Fed’s statement and Powell’s press confrence, EURUSD is in a “No Man’s Land”

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EURUSD : Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. Chartreaderpro does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

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