Fed rate hike – MaiMarFX

Will The Fed Buoy The Dollar?

December 13, 2023/in General News & Updates /by MaimarFX

Instead of clinching in some profits on Tuesday, we had to deal with nervous price swings which have led to some losing trades.

U.S. inflation data came in largely in line with expectations but the slight uptick in underlying inflation may lead the Federal Reserve to push back on rate cuts for the next year.

Turning to the December FOMC meeting today, no changes in rates are anticipated, but the Fed could offer a hawkish guidance to avoid further relaxation of financial conditions. Over the past month, interest rate expectations have shifted in a dovish direction, with traders pricing in more than 100 bp of easing through 2024. These expectations appear extreme, given the current economic reality of job growth and still sticky inflation. If the Fed retains a hawkish bias and signals that it will not cut rates as much as the market discounted, Treasury yields could shoot higher as traders unwind dovish bets on the Fed’s forward guidance. And thus, the U.S. dollar would rise.

Today’s comments by Fed Chair Jerome Powell at the press conference which is scheduled for 19:30 GMT, could set the tone for the early weeks of 2024.

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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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Fed Decision And Trading Signals

July 26, 2023/in General News & Updates /by MaimarFX

It’s Federal Reserve decision day. The central bank is expected to raise interest rates by 25bp to a range of 5.25-5.50 percent. This move is fully priced in. The focus will be on the policy guidance for the next months. If Fed Chair Jerome Powell indicates more hawkish moves ahead, the U.S. dollar will rise. If he abandons his hawkish rhetoric instead, the dollar will weaken.

However, today’s decision could be less volatile for traders since no summary of economic projections will be provided this time.

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

Summer doldrums: We advise traders not invest too much or doing a trading break since volatility typically remains at very muted levels during the summer months of July and August. When volatility is low, there is more to lose than to gain.

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 26/7/23:

EUR/USD

Long @ 1.1125

Short @ 1.1035

GBP/USD

Long @ 1.2915

Short @ 1.2865

DAX® (GER40)

Long @ 16280

Short @ 16190

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.

Any and all liability of the author is excluded.

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Is Fed’s Rate-Hike-Pause A Done Deal?

June 14, 2023/in General News & Updates /by MaimarFX

U.S. inflations figures came in as expected, providing room for the Federal Reserve’s wait-and-see approach. There is a 90 percent probability that rates will be put on hold at today’s FOMC decision. Further expectations lean towards a 25bp rate hike in July. Since a rate-pause scenario this month is largely priced in, more focus will be on the monetary policy guidance and fresh economic projections to determine what comes next. If terminal rate projections and inflation estimates are revised higher, it would reignite hawkish concerns and thus, support the U.S. dollar.

The Fed rate decision alongside economic projections is due to be released today at 18:00 UTC, followed by the press conference 30 minutes later.

GBP/USD: The pair trended higher, heading towards 1.2650. As mentioned in Monday’s analysis, we will keep tabs on a bullish breakout above 1.2670.

EUR/USD: The euro swiftly rose above 1.08 but was unable to hold above that benchmark – at least for now. We expect increased volatility around the FOMC decision and watch out for price breaks either above 1.0835 or below 1.07.

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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.

We wish you good trades!

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U.S. Dollar Rebound To Continue?

May 15, 2023/in General News & Updates /by MaimarFX

What we saw last week was a sharp U.S. dollar rebound after hawkish comments from the Federal Reserve and still-elevated inflation raised doubts on whether the Fed will pause rate hikes at their next meetings. Since recent Fed speak has tilted toward the hawkish side with some central bankers hinting at the probability that the central bank may not be done raising rates. A speech from Fed chair Jerome Powell is scheduled for Friday. Further concerns remain meanwhile around the debt ceiling while Treasury Secretary Janet Yellen made clear that if raising the debt ceiling is not forthcoming, there will be damage to the U.S. economy and financial markets.

GBP/USD

The pound ended last week lower against the greenback, exiting its recent upward trend channel and entering oversold territory. Meanwhile, the 1.25-mark remains a crucial price level. If sterling is able to climb back above 1.25, the focus shifts back to a resistance around 1.2550-1.26. If 1.25 cannot be recaptured further losses are likely with a potential test of a lower support at 1.2350.

EUR/USD

Taking a look at the weekly chart, a correction from high price levels seemed inevitable and reasonable. Even though the pair entered in shorter time frames oversold territory we prepare for further losses towards 1.0750. However, a crucial support zone ranges from 1.0650 to 1.05 which is likely to dampen selling pressure.

Daily Forex and DAX Signals:

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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.

We wish you good trades!

Any and all liability of the author is excluded.

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Fed Decision Day

May 3, 2023/in General News & Updates /by MaimarFX

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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All Eyes On The Fed

March 22, 2023/in General News & Updates /by MaimarFX

Speculation that an impending economic slowdown will prompt central banks to switch back to looser monetary policy triggered a renewed surge higher in markets. The euro and DAX recovered recent losses while the U.S. dollar tumbled despite higher Treasury yields.

All eyes turn to the Federal Reserve rate decision today at 18:00 UTC and Chair Jerome Powell’s press conference 30 minutes later. The probability of a 25bp rate hike is around 75 percent. Sure is, that if the Fed puts the banking crisis ahead of inflation and rate increases, the dollar will go even lower. Traders should expect high volatility.

EUR/USD: Focus is on a break of 1.0810 that could send the euro towards a test of 1.09-1.0950. Above 1.0960 we will pay attention to the euro’s latest high at 1.1033. On the downside, we will watch out for a break below 1.0680 and further below 1.0650 in order to sell the euro towards 1.0550.

GBP/USD: The cable reversed shy of 1.23. If the resistance area around 1.2350 breaks to the upside, we could see another of 1.2450 with a potential breakout chance to the upside. Bears should watch out for prices below 1.21 in order to sell the pound towards 1.20 and 1.18.

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 22/3/23:

EUR/USD

Long @ 1.0780

Short @ 1.0735

GBP/USD

Long @ 1.2275

Short @ 1.2185

DAX® (GER40)

Long @ 15260*

Short @ 15190

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!

Any and all liability of the author is excluded.

www.maimar.co

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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!

Any and all liability of the author is excluded.

www.maimar.co

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Market Overreacted To Powell’s Comments

July 28, 2022/in General News & Updates /by MaimarFX

It happened as expected: The Federal Reserve raised rates by 75bp and the market misinterpreted this month’s hike as a pivot towards a dovish monetary policy stance and thus sent the U.S. dollar tumbling. This is a classic market overreaction towards a potential monetary policy shift when the current guidance is already priced in. Caution is however warranted as we could be still far from the peak.

Fed Chair Jerome Powell said that another big increase is possible and projected rates to be at 3.8 percent in 2023, a projection that is above market expectations. Yet investors interpreted Powell’s comments that rate hikes will slow. The key phrase was that the pace of tightening would slow at some point but that didn’t flag a pivot to lower rates or even a pause, according to Fed watchers.

However, both euro and cable overshot following Powell’s comments. The best performer was the pound sterling that broke above the descending trendline and headed towards 1.22.

We believe that gains in the GBP/USD could be limited to 1.2250 as the pair entered overbought territory.

There were no breakouts in the EUR/USD which remains in its current trading range between 1.03 and 1.01.

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.

Any and all liability of the author is excluded.

www.maimar.co

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Will The U.S. Dollar Retreat On A 75bp Rate Hike?

July 27, 2022/in General News & Updates /by MaimarFX

It’s the Federal Reserve’s decision day and traders brace for a 75bp rate increase. The market’s key question is whether the Fed is nearing a projected 3.4 percent rate peak around year-end before Fed policy makers can start easing again to tackle the risk of recession. We bear however in mind that the market is often ahead of itself which is why talking about easing monetary policy could be premature at this point.

Nonetheless, the growing risk of a recession may force Fed policy makers to deliver smaller rate increases towards the end of this year. A shift in the Fed’s forward guidance may produce headwinds for the U.S. dollar in the coming months. So, we may see the greenback struggling to hold onto its gains even when the Fed hikes as expected.

In other words, a 75bp rate hike may not be a bullish catalyst for the dollar if additional rate hikes this year are not signaled. And the chance of a 100bp rate hike is at only 13 percent.

Given the summer lull we do not expect market movements to be extraordinarily large.

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We wish you good trades!

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Is The Fed Rate Hike Cycle Nearing Its Peak?

July 25, 2022/in General News & Updates /by MaimarFX

Welcome to a new trading week and our last one before the summer holiday break.

Top even risk is Wednesday’s FOMC rate decision which where Fed Chairman Jerome Powell and his colleagues are expected to raise rates by another 75bp after raising rates by 75bp in June. Powell has said following the Fed’s last 75bp hike that it is an unusually large one, he does not expect rate hike moves of that size to be common. However, the market is now dealing with the debate of a 75bp or 100bp hike and the U.S. dollar’s reaction to it. According to economists, there is no appetite for a full-point increase at any time during this rate cycle.

From a seasonal perspective, the last week of July historically exhibits lower volatility and volume, which is why extraordinary large market moves might be missing.

Looking further ahead, a survey of 44 economists forecast the Fed will raise rates by another 25bp in early 2023, reaching a peak of 3.75 percent before pausing and starting to cut rates before the end of the year.

We wish you good trades!

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