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FOMC

EUR/USD inches closer to 1.10 ahead of FOMC and ECBWe are heading into a potentially very volatile 24-hour period, with the Fed set to kick things off today, before the BoE and ECB make their policy decisions on Thursday. The EUR/USD and GBP/USD will thus be in focus. The trend for both remains bullish heading into these central bank meetings, but let’s focus on the EUR/USD here. All eyes on Jay Powell and FOMC The EUR/USD has remained inside a tight range over the past several days, with 1.0900 area offering resistance and 1.0800 support. Ahead of the FOMC, it has tried to break away above 1.09 handle, although the bullish momentum has understandably been weak with most traders sitting on their hands until the Fed decision is out of the way. I think there is a good chance we could see a bullish break out soon with 1.1000 likely to be the main short-term objective, owing to further weakness in US data. But on FOMC days, there’s usually a bit of volatility before the trend resumes. So, don’t dismiss the potential for another dip before the resumption of the bullish trend. The FOMC is expected to reduce the pace of hiking further, to 25 basis points at the conclusion of its meeting today. The policy statement will be released at 19;00 GMT, with Jay Powell’s presser to start half an hour later. The Fed Chair is likely to keep further hikes on the table and lean against bets they will cut later this year, something which may get interpreted as being hawkish. But as we have seen in recent Fed meetings, the market has been quick to dismiss the Fed’s hawkishness and price in a lower terminal interest rate. Are we going to see a similar response this time, too? More signs of weakening US economy Well, the weakness in US data continued today, with the ADP payrolls printing its lower number since last January at 106K vs. 170K eyed. On top of this, the ISM manufacturing PMI fell deeper in the contraction territory, printing 47.4 vs. 48.0 expected and 48.4 last. Worryingly, new orders contracted at a faster pace too, printing 42.5 vs. 45.1 in December. Employment in the sector declined. Today’s weaker ADP and ISM data follow several other weaker-than-expected data on Tuesday, all helping to re-enforced expectations that the Fed will be more inclined to stop its hiking cycle sooner. Employment Cost Index, a key measure of wage inflation, rose by 1% q/q, which was weaker than expected, while the latest Chicago PMI reading (44.3 vs. 45.1 expected) and CB Consumer Confidence index (107.1 vs. 109.1 expected) both also disappointed. Focus will turn to ECB next The European Central Bank is set to hike interest rates by 50 basis points on Thursday, lifting the Main Refinancing Rate to 3.0% from 2.5% currently. While this is fully priced in, there’s still a lot of uncertainty in terms of forward guidance, which is what will ultimately determine how the markets react on Thursday. Given the recent weak indicators from Germany, it looks like growth at the Eurozone’s largest economy has weakened again, which could be an indication for what’s to come in the early parts of this year. As a result, the ECB will not want to be too aggressive in its forward guidance, especially as other central banks have now either slowed the pace of tightening or paused it. That said, given that inflation remains very high here compared to the US, the ECB is going to tighten its policy at least a couple of more times before pausing. This should help provide support for the euro on the dips. How will the markets react to the ECB decision? So, the interest rate decision should be a straight-forward 50 basis point hike. Let’s take a look at various scenarios insofar as the forward guidance is concerned. Investors will want to know whether the ECB is going to fully commit itself to another 50-bps hike in March and at its next meeting. 1) If so, this should send the EUR/USD 100-200 pips higher on the day, above the 1.10 handle, and cause the DAX and other European indices to slump. 2) The second scenario would be if the ECB keeps the door open for 50-bps hike in March but provides a less hawkish forward guidance for its subsequent meetings. This would probably prevent the EUR/USD from moving too much away from 1.10 handle and keep equity market bulls somewhat happy. 3) The third scenario would be if the ECB does not pre-commit to any further 50-bps hikes and instead suggest that the pace of tightening will slow down. In this scenario, the EUR/USD should drop sharply, perhaps by 100-200 pips in initial response to around 1.0700, while the DAX could surge by 2% or more. By Fawad Razaqzada on behalf of FOREX.com
by FOREXcom
Bitcoin movement in FOMC! So right now Bitcoin is bullish + bearish as well it's upon whales now how they are going to play BTC and FOMC results, higher changes are for 25BPS well let me tell you what mindset you should have right now! Till the time we don't break the 21430-21300 key support level don't be bearish Right now I am still Bullish on bitcoin and I am hedging the trades just because I have my long-running from 21500 Again be bullish till we break the support of 21300 ✅
by TradingTigers07
Can Dow Jones Rise Above Falling Trend Line?It's FOMC day! The markets have already priced in the 25bps rate hike so Powell's speech will be the most important thing today. A dovish Fed can help Dow Jones break the falling trend line and finally see acceptance above the resistance level of 34000. While I'm expecting a dovish speech from Powell today, the inflation fears are slowly fading away and recession fears are taking over, so in this environment, it's best to trade with minimized risk on stocks.
TVC:DJI
by egegonulcan
USDJPY H4 - Short Signal USDJPY H4 - Depending on the way the FED sways later on this evening, will no doubt impact this pair, whilst the dollar has whipsawed somewhat, the YEN is holding it's own against the dollar, a typical scenario where we are seeing a firefight between two relatively bullish pairs for the moment, ideally we want to sell something knowingly weak against something knowingly strong. However, it's worth keeping an eye on this pair from this key trading zone around the time of the FOMC
Short
by Trade_Simple_FX
1
DXY H4 - Long SignalDXY H4 - Breakout seen last night, which saw us follow gold from $1900 to $1920/30 respectively. Exhaustion seen and that's where we posted the short signal from. $1930, hopefully down towards $1900 support and possibly beyond, depending on the outcome and projections from the FED later on this evening. Not entirely sure how much the USD will want to move ahead of this economic event, as you all know by now, we often see stagnated markets before big news releases.
TVC:DXYLong
by Trade_Simple_FX
uvxy short volume uptickweve slightly gained in vix, and the ftz from top of short leads out to where uvxy should make its low sub $4... if we examine the capitalcom vs finra we see that contango in vix is still coagulating around a major demand zone low into its decay. i still think split will be bullish for vix, but perhaps we clear the pop in fomc, and the loose steam is actually bullish in the long run i would still expect vix to lose weekly, as well as lose by the end of ftz.
UShort
by cerealpatterns
USDJPY TO 139"Based on a thorough technical analysis, I have identified an ascending triangle pattern on the 4-hour chart of the US Dollar Index (DXY) and a bearish flag formation on the daily chart. Additionally, a doji pattern has been observed on the monthly chart, indicating potential market indecision. On Wednesday, it is expected that the DXY will experience a rise due to the Federal Open Market Committee (FOMC) meeting. Furthermore, Governor Kuroda's recent statement refusing to tighten monetary policy is likely to result in a weaker Japanese Yen, thereby contributing to the expected rise in the DXY. I wish all traders a profitable and successful trading week ahead."
Long
by kithinjimicah
5
US30 SHORT BIAS (UPDATED)!Hello all! Quick recap on US30 from my recent analysis videos.. I did explain previously why i am bearish on Dow, beside US30 being in high curve on HTF. The pair moved the way projected in my recent analysis, mitigating the refined weekly Supply you see in the photo, and selling to the Demand zone where the usual price cycle appeared.. Now i will be waiting for Dow to touch 34170 zone and monitor LTF. If the pair mitigates during FED speech i will sell aggressively. If not i will wait for confirmation. This sell will be a swing down to 30k. Take care, trade safe!
EIGHTCAP:US30Short
by NeddFx13
ARHS - Arhaus, Inc.Very nice reaction off of the 9ema this morning. Largest 30-min volume since the gap up on raised revenue guidance. Started a small position; couldn't justify a full position with the overall market being slightly extended on a short-term basis and showing negative action on the day. Will look to add over the debut price high of $14 only if the broad market continues its bullish phase. The all-time-high of 14.95 looms overhead, but with the volume & growth on this name, I'd expect it to clear that level as long as the market environment remains favorable. The FOMC decision and statement on Wednesday will have a major impact on the market environment. Even if I am shaken out of this starter position, I'm keeping this one on my focus list for as long as the environment remains healthy. This has the potential to be a true market leader.
NASDAQ:ARHSLong
by apaqu
SPY weekly Review 01/30/2023 - All timeframes, & AM routineIn this Video I do a quick analysis of the current condition of markets based on the SP500 proxy index the SPY. I also go through a few weekly data points as I am hoping to publish this every Monday to summarize the week head, and behind. This video is a bit long as I go through all my tools and routines, plus we have a very hectic week this week with FOMC, Earnings, Jobs, PMI, and much more. Inflation data on the horizon also (PCE Index which the FOMC cares most about, not PCI).
AMEX:SPYLong
by Markets-Sniper
BTC: $25K BEFORE FOMC AND THEN NUKE!!Hello everyone, if you like the idea, do not forget to support it with a like and follow. Welcome to this quick BTC update. BTC is going well and is currently trading above the $23.5k level. Let's discuss the next possible scenario from here. BTC breaks above the crucial resistance of $23.3k after two days and as of now holds above it very well. As long as BTC holds above this $23k-$23.3k level we have a high chance that we see another leg up. We have another important FED meeting (FOMC) on Wednesday so I'm expecting a last push up to the $25k level before FOMC and after that, we might see a huge correction. Overall this week will be very crucial for us so trade very carefully. Do not get REKT by doing Fomo or some silly mistakes. Remember market always gives opportunities no matter what. Invalidation of $25k is if we break below $22.5 What do you think about this? Share your thoughts in the comment section. If you like this idea then do support it with like and follow. Thank You!
Long
by CoreCrypto1
4
The (Jan) FOMC meeting playbook – assessing the risk to the USDTime – The FOMC statement comes out on 2 Feb at 06:00 AEDT/ 1 Feb 19:30 GMT. Chair Powell’s press conference comes out at 06:30 AEDT / 19:30 GMT Trading considerations: Positioning – Investment banks who manage flow across spot FX, swaps, and FX forwards report that clients are net short USDs, notably by real money and leveraged, although the position is not at extremes. In the weekly TFF (Traders for Financial Futures) futures report we see that leveraged funds (hedge funds etc) have flipped to a long USD position, notably vs the AUD, EUR, and CAD. Real money accounts (asset managers, pension funds) are also net long USDs, but that position is mostly held vs the EUR. The notional position in futures is far smaller than those held in spot or forwards market, but the data is more transparent and easier to source. So as we head into the FOMC meeting, there are risks of a USD short squeeze, notably vs the JPY. If I look at 1-week implied volatility across the USD pairs the expected moves (higher or lower) over the week are hardly explosive and many sits around the 30th percentile of the 12-month range – this suggests the market is not expecting any major surprises and refrain from paying up for options volatility – I see this as an important consideration in our risk management, as it is often prudent to reduce exposures over an event where the market is expecting significant movement and the range of outcomes are varied. What to watch for? I expect a hawkish statement from the Fed this week, but so do most market participants and it is a strong consensus view. On the point of rate hikes, a 25bp hike is fully discounted, and while a 50bp hike can’t be ruled out, it would be a huge surprise. We look out the interest rate curve and after this week’s hike, see two more 25bp hikes pencilled in by mid-2023 - traders will need to marry the tone of the statement and Powell’s press conference with this pricing structure. In the less likely outcome that the Fed give the impression that they could pause after this week’s hike, then the USD could easily sell off and risky assets rally. I suspect Powell will want to be non-committal either way and allow the Fed maximum optionality to react to unfolding economic data. One big consideration is that financial conditions (as measured by moves in equity, bonds, credit, USD, and the VIX index) have loosened to a point where Chair Powell may detail the extent of easing is “unwarranted” – this pushback could be a key focal point, especially given we’ve seen a rise in commodity prices that is starting to lift inflation expectations. Would the market buy this pushback? I’m not sure the market de-risks too intently should we hear a push-back on easier financial conditions, as the market is seeing a Fed that is largely in control – at least at this stage. Wages are growing at a slower clip, while core PCE inflation is running at a 2.9% 3-month annualised pace - the slowest since Jan 2021. We see growth is still positive but below trend, and that should mitigate the need to really hit demand by taking the fed funds rate to say 6%. Somewhat more concerning is that soft data is thematic of recessionary readings, leading indicators are negative, and the consumer is pulling back on spending – it’s no surprise then that then the market anticipates a near-term pause in the hiking cycle. Then there’s the lag effect, where some 425bp of hikes still need to fully feed through to the economy. In a world of nuance, the Fed could portray that we’re closer to an end in the cycle – here, we could see a tweak to the line in the FOMC statement, where “the Committee anticipates that ongoing increases in the target range will be appropriate” – where the word ‘ongoing’ is either removed or altered to “further increases”. Where do the risks sit? There doesn’t seem much reasoning for the Fed to alter its course here and should continue to highlight a commitment to reducing inflation. At this juncture, it seems unlikely the Fed would want to appear dovish, so with the risk are for a hawkish Fed – albeit this is expected - and in a market where leverage funds are short USD (in the spot market), the risks are small skewed to USD upside, which by extension this means a lower NAS100 and XAU price. Whether that plays out is another thing and perhaps the best way to trade this tactically is to stand aside and let the market react accordingly, with a view to selling rallies in the USD for a resumption of the bearish trend.
PEPPERSTONE:USDXShort
by Pepperstone