It is a fight between financial stability and fighting inflation. The Federal Reserve will meet on Tuesday and Wednesday to decide its next step on interest rates. The Fed’s next move will be closely watched as recent bank failures are stirring memories of the 2008 financial crisis. Policymakers are in a dilemma between the need to stabilize the financial system and contain inflation to avoid wider cracks in the banking industry. Rate hike expectations shift very quickly in recent days, so traders should expect high volatility on Wednesday. If the Fed indicates confidence in the banks’ ability to access liquidity and deal with deposit flight, it can keep its focus on inflation, which at 6% is still well above its price stability goal of 2%.
The focus will be on Fed chair Jerome Powell’s communication and how he explains its recent hawkish stance without stirring further concerns. Expectations tend in favor of a 25bp increase after all bets of a 50bp hike have vanished.
On Thursday, the Bank of England is expected to raise rates by a quarter basis point hike.
Elsewhere and amid financial stability concerns, the DAX crashed towards 14500. If this support breaks, the next lower target is 14000. Resistance is currently seen at around 14800.
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Our trading ideas for today 20/3/23:
Long @ 1.0675
Short @ 1.0640
Long @ 1.2210
Short @ 1.2160
Long @ 14660
Short @ 14490
Settings for all trades today: Entries from 8:00 am UTC, SL 25, TP 40
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.
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