Fed meeting – MaiMarFX

Busy Week Ahead

January 29, 2024/in General News & Updates /by MaimarFX

We entered the last week of January which is traditionally very busy and this year is no different with a packed economic calendar of key central bank decisions and big data releases.

The Federal Reserve policy meeting on Wednesday will be the highlight in the days ahead and while market participants remain convinced that a dovish pivot is drawing closer, prominent Fed managers warned that expectations around future rate cuts were too optimistic and that the Fed does not intend to cut rates as quickly as the markets expect. With no change in monetary policy and no dot plot release this week, traders will be looking for fresh hints on the timing of the first rate cut by Fed Chair Jerome Powell in his press conference. If Powell leaves the door open to a possible rate cut in the first half of the year, the U.S. dollar could weaken.

Furthermore, the greenback’s direction will also hinge on the latest U.S. jobs numbers which will be release on Friday. The jobs market is forecast to have cooled in January. An upside surprise in the payrolls report would diminish hopes for an early rate cut and the dollar could thus experience a short squeeze.

On Thursday, the Bank of England meets to set its monetary policy. Like the ECB and Fed, the BoE is expected to keep rates unchanged. There are no expectations for any rate cuts soon, but the BoE may make its first dovish tilt in its February meeting, a move that would be negative for the pound.

The overall price development remained very sluggish for traders and even a better-than-expected U.S. Core PCE report from last Friday could not really boost the U.S. dollar. However, the tight ranges are likely to be tested due to an anticipated lift in volatility in the days ahead.

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U.S. Dollar Sells Off After Less-Hawkish Fed Statement

March 23, 2023/in General News & Updates /by MaimarFX

We got what we were looking for: A volatile price breakout with a good profit. We were able to catch a 100-pips-gain in the EUR/USD amid a broad-based sell-off in the U.S. dollar. The greenback’s move was prompted by the Federal Reserve’s softer guidance, which was less hawkish, suggesting that the central bank’s rate hike cycle is close to its end. This bearish outcome led to the sell-off in the dollar and pushed other counterparts higher in turn.

EUR/USD: Focus is now on the 1.0930-50-resistance zone. A break above 1.0960 could lead to a test of the 1.1033-February-high. A current support is seen at around 1.0750.

GBP/USD: Next hurdle lies at 1.2350, followed by the crucial 1.2450-resistance. The 1.22-area could act as a support for now.

The Bank of England is due to decide on interest rate hikes today. Any less-hawkish monetary policy decision could see sterling trade lower.

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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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Financial stability versus price stability

March 20, 2023/in General News & Updates /by MaimarFX

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.

Daily Forex and DAX Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

Our trading ideas for today 20/3/23:

EUR/USD

Long @ 1.0675

Short @ 1.0640

GBP/USD

Long @ 1.2210

Short @ 1.2160

DAX® (GER40)

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.

We wish you good trades!

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U.S. Dollar Soars On Fed’s Dot-Plot And Traders Profit

June 17, 2021/in General News & Updates /by MaimarFX

We got what we have been looking for in a best-case scenario relative to our trades: A hawkish surprise from the Federal Reserve and a subsequent big price move in the U.S. dollar, providing a large monetary profit. We were able to take a 100-pips gain with our short trade in the EUR/USD and a 67-pips gain in the GBP/USD.

The Fed sent a more aggressive signal in order to prepare the market for a taper. Fed Chair Jerome Powell said that officials would begin a discussion about scaling back bond purchases, admitting that “the economy has clearly made progress”. “You can think of this meeting as the talking-about-talking-about meeting, if you like” Powell added referring to the taper debate.

However, the biggest surprise was the Fed’s dot-plot forecast that showed eleven officials saw at least two rate increases by the end of 2023 while seven of them saw even a move early as 2022. In comparison to the March forecast: The newest projections showed 13 of 18 Fed officials favored at least one rate hike by the end of 2023, versus seven in March.

The greenback soared on that hawkish signal.

Powell, however, cautioned the discussion about raising rates, saying it would be “highly premature”.

Are there more dollar gains in store? Maybe, as the Fed inches towards tapering but traders should be cautious amid thin liquidity conditions and the summer doldrums. Price movements could be limited to resistance and support levels.

EUR/USD: The euro dropped slightly below 1.20 but refrained from a dip below 1.1980 – at least for now. Below 1.1980 we see a next lower target at 1.1930. A break below 1.19 could even see accelerated bearish momentum towards 1.18 and 1.16. On the upside, a current resistance is seen at 1.2120.

GBP/USD: The cable broke below 1.40 and if the pair now falls below 1.3970 it may extend its slide towards 1.3910 and possibly even 1.38. A current resistance is seen at 1.41.

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Will The U.S. Dollar’s Rebound Continue?

June 14, 2021/in General News & Updates /by MaimarFX

The U.S. dollar rebounded on Friday while short traders in the EUR/USD and GBP/USD were able to book a good profit with both major currency pairs declining towards crucial support levels. We will have a look at the technical picture further below.

This week, all eyes turn to the Federal Reserve meeting with the Fed’s policy decision and press conference due on Wednesday. The market is unanimous: The Fed will reaffirm that its ultra-loose policy remains appropriate, and that it is too soon to start the taper talk. While this might be the case at the Fed’s press conference on Wednesday, chances are slightly in favor of a modestly stronger U.S. dollar. Economists predict that policy makers won’t signal scaling back monetary stimulus until the Jackson Hole Economic Symposium in late August but the quarterly rate-forecast “dot-plot” could show at least one rate increase in 2023. By way of reminder, the Fed’s forecast in March showed no liftoff until 2024. Such change would be slightly more hawkish. In a nutshell, it will be hard for the Fed to be more dovish than the market currently expects. But if there is a hawkish surprise, the greenback will soar with market participants rushing pricing in the shift.

Is the shift in monetary policy starting? To be sure, the shift is still conditional.

Fed policy makers continue to insist that higher inflation is unlikely to persist as it reflects bottlenecks as the economy rebounds from the pandemic. As for the labor market, recent weaker-than-expected job data strengthen the Fed’s wait-and-see approach.

Economists are therefore split on when the tapering announcement is most likely. One-third predict August, another third September and the last third December.

EUR/USD

The euro posted an almost linear decline until the 1.21-support last Friday. If we now see a break below 1.2080, the focus shifts to the lower support at 1.20. For the euro to resume its primary uptrend, it would need a sustained break above 1.2250.

GBP/USD

We see a mesh of support and resistance lines in the cable’s chart. Given the recent downward movement we see a next support zone between 1.4080 and 1.4060. Below 1.4070 we could see the pair drifting towards the crucial 1.40-support. On the topside, the 1.42-resistance needs to be broken before shifting the focus towards a higher target at 1.4280.

Trading could be muted at the beginning of this week with a number of holidays including Australia and China. Have a good start to the new week everyone.

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