USD: FOMC and PPI impact on the Market
The U.S. dollar, as gauged by the DXY index, experienced a significant drop of nearly 0.9% yesterday. This decline was driven by a substantial fall in U.S. Treasury rates following the Federal Reserve's unexpected dovish guidance. The Fed's departure from the anticipated outcome caught investors off guard, leading to a swift reversal in the market.
In its final meeting of the year, the U.S. central bank maintained current borrowing costs at multi-decade highs. However, a notable shift in strategy became evident as the Fed embraced a more lenient view of inflation and acknowledged discussions about potential rate cuts. The Summary of Economic Projections revealed a possible easing of 75 basis points in the coming year, aligning more closely with the market's outlook.
EURUSD - D1 Timeframe
The Daily timeframe of EURUSD chart presents a sharp bullish movement as a result of the aftermath of the FOMC interest rate. Due to the spontaneous nature of the price action, it appears that a lot of retail traders will be aiming for a sell in order to catch the retracement of the move, in my view, however, price has not yet reached a reliable zone for a proper retracement to happen; hence, the bullish pressure continues.
Analyst’s Expectations:
Direction: Bullish
Target: 1.09570
Invalidation: 1.08705
GBPUSD - D1 Timeframe
In a similar manner to what we already analyzed on the EURUSD chart, the daily timeframe chart of GBPUSD experienced the same bullish spike in the price action. And at the moment, my sentiment remains bullish, since price has not yet reached a key level from whence a reversal could likely take place.
Analyst’s Expectations:
Direction: Bullish
Target: 1.27191
Invalidation: 1.26133
AUDUSD - D1 Timeframe
AUDUSD is one chart I’m personally watching closely. At the moment, I am convinced that the bullish momentum is yet to reach its destination, and as such, sentiment remains bullish. However, based on the reactions observed as soon as price reaches my key level, I am quite confident the market would make a reversal.
Analyst’s Expectations:
Direction: Bullish
Target: 0.67550
Invalidation: 0.66631
CONCLUSION
The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.
You can access more trade ideas and prompt market updates on the telegram channel.