Final Working Week of 2024
This is the final working week of 2024 and investors were cautious ahead of this week’s Federal Reserve meeting.
The Fed is set to decide its interest rates on Wednesday, where a 25 basis points cut is largely priced in. However, markets were cautious about the Fed’s long-term rate trajectory as inflation has remained a major concern. Sticky inflation figures last week have clouded the long-term rate outlook. The focus on Wednesday will thus be on the updated rate projections. Fed chair Jerome Powell’s remarks last month, highlighting that downside risks to the labor market had diminished while inflation remained more persistent than anticipated, have traders on edge for a potential hawkish cut. The Fed’s forward guidance will therefore be key. If the central bank maintains its projection of four 25bp cuts next year, it could stoke concerns about its willingness to finish the inflation fight.
The EUR/USD struggled to find a direction and remained sideways between 1.06 and 1.04. Traders hope for the Fed decision to ignite volatility.
Also, the GBP/USD took a breather from its recent downtrend and trended between 1.2850 and 1.26. In case of a renewed break below 1.2590, we pencil in next lower targets at 1.25 and 1.24.
We wish you a happy Christmas season and the best of luck and success in the new year!
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