USDJPY is moving in the Descending channel and the market has reached the lower high area of the channel.
Later today, I read on the economic calendar that the FOMC will have a meeting, during which they will reveal some important information that will affect the currency markets. The Federal Open Market Committee (FOMC) will announce both their economic outlook and their aims for the following years, in addition to their decision on where interest rates will be set.
Interest Rate Decision
I am anticipating that the Federal Reserve will decide to raise interest rates by 25 basis points on Wednesday. This will be a pullback from the decision made at the December meeting of the Federal Open Market Committee (FOMC) to raise rates by 50 basis points.
XAUUSD- Gold is moving in the Descending channel and the market has reached the lower high area of the channel.
This has been one of the most eagerly anticipated decisions that have been made all year. The outcome of this judgement has been something that I have been anxiously expecting all week. Because inflation has been out of control for the past few months, the economy of the United States is in a precarious position. I believe the ongoing conflict in Europe between Ukraine and Russia has unquestionably contributed to a worsening of the situation as well.
The Inflation Problem
The Federal Reserve has agreed to make some adjustments to the country’s interest rates in order to bring the country’s persistent inflation problem under control. At the forthcoming meeting of the FOMC, critical information on the new interest rates will be discussed.
EURUSD is moving in an Ascending channel and the market has fallen from the higher high area of the channel.
We need to have an understanding of the function that this committee plays as well as the specific things that they are able to accomplish in order to comprehend the significance of the FOMC meeting for the future of the currency markets. After all, I can see it appears that they are making some crucial decisions that will have an effect on an industry worth a billion dollars.
Janet Yellen Speech
According to most forecasts, I believe that the Federal Reserve will likely reduce the pace of interest rate rises again in February. Janet Yellen, the Secretary of the Treasury, does not want the positive economic outcomes that the country has witnessed over the previous several months to distract from the risk of a recession occurring this year.
GBPUSD is moving in the Box pattern and the market has rebounded from the horizontal support area of the pattern
In a recent speech I was listening to by Yellen, she reveals, “I’m reasonably satisfied by the data that I’ve seen so far, but I don’t want to minimize the risk of recession. The path that I see to maintaining a strong labor market while bringing inflation down does involve a slowdown in growth.”
John Hickenlooper Speech
Sen. John Hickenlooper, a Democrat from Colorado, wrote a letter to the chair of the Federal Reserve, Jerome Powell, on Monday. He was encouraging him to reconsider continuing to raise interest rates in light of recent statistics showing that inflation in the country is decreasing.
USDCAD is moving in the Descending channel and the market has reached the lower low area of the channel
“Inflation is at its lowest level since October 2021, and economists widely believe inflation is already or will soon be under control. Further interest rate hikes will only make it more expensive for small businesses to fund their operations. It will also put a drag on consumer spending, which accounts for two-thirds of the economy. At the same time, widespread concern of a recession continues to weigh on the economy. This is because 20% expect to lay off employees.”
Feds Powell Expectations
In light of the fact that the financial markets believe the Federal Reserve will cease rising interest rates in the near future and may even reduce them by the end of this year, I believe Powell will need to take action to temper such confidence. If financial markets anticipate interest rates to be lower than what the Fed intends to deliver, an already challenging task for the central bank may become even more challenging.
AUDUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
I am anticipating that Powell will deliver his stern message at a press conference. This will follow the announcement of the most recent decision taken by the 19-member policy committee of the Fed. The decision-makers are planning to lift their benchmark rate by a quarter point. This will bring it up to a range of 4.5% to 4.75%. This will be the rate’s highest level in around 15 years.
The action has the potential to significantly boost interest rates on loans taken out by consumers as well as firms. This was including mortgages, car loans, and loans for businesses. I think the problem that faces the Federal Reserve now is, in some respects, more difficult than it was a year ago. There was a time when inflation rose far more quickly than government officials had anticipated it would.
Powell had first regarded high inflation as simply a transitory phenomenon. The policymakers acquired a clear understanding of what was required after being taken aback by the unexpectedly high levels of inflation. I believe this is an aggressive set of rate rises that are being implemented with certain goals. The goals are of reducing borrowing and spending, slowing GDP, and bringing down rising inflation.
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