Fed Decision Day

It’s Federal Reserve decision day and the central bank is expected to deliver a 25bp interest rate hike and then signal a pause in its aggressive hiking path. Inflation is expected to cool more meaningful in the months ahead which could allow for the Fed to stop raising rates. However, there is room for a surprise and since the market prematurely speculates on potential rate cuts toward the end of the year, any signs for further tightening would come as a surprise and strengthen the U.S. dollar.

Thus, sustained strong inflation and jobs data could add pressure on the Fed to continue hiking, leaving the greenback’s counterparts exposed to further downside.

The most likely scenario however is that if the Fed officially hits the pause button, the U.S. dollar is likely to weaken, as traders attempt to front-run the next moves, which in this case would be rate cuts. With other key central banks, such as the ECB, still seen hiking borrowing costs a few more times this year, monetary policy divergence is expected to play against the greenback.

The Fed decision is due at 18:00 UTC, followed by the Fed press conference 30 minutes later.

Sideways direction

EUR/USD: The euro recently traded within a sideways range between 1.11 and 1.09. If we see an upper breakout above 1.11, the next target is 1.12. Falling below 1.09 could see further losses towards 1.0750.

GBP/USD: If the pound stabilizes above 1.25, we could see a run for 1.2650. A sustained break below 1.24, however, could lead to a test of the lower support area at 1.23.

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

Monthly results 2023:

April 2023 (5 days trading only): +38 pips

March 2023: +408 pips

February 2023: +475 pips

January 2023: +123 pips


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