Will the FOMC Surprise the Markets?

Will the FOMC Surprise the Markets?

2023-02-14 • Updated

The Backstory

The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.

How does this affect the Forex market?

The interest rates provide insights into the strength of the US Dollar, which helps traders and investors manage their expectations from the currency. Increased rates often lead to increased strength for the Dollar.

What do the charts have to say?

In light of the fundamental breakdown above, we will draw our conclusions from the outlook of price on the charts using price action.

US Dollar - Daily Timeframe


The US Dollar on the Daily timeframe has made an initial reaction off the Daily Pivot as predicted in my previous articles. The reaction seems to have even broken above a miniature trendline resistance, giving us further confidence in the possibility of a bullish price action toward the 50-Day Moving Average as the very least target.

Analyst’s Expectations: 

Direction: Bullish

Target: 104

Invalidation: 101.7

EURUSD - Daily Timeframe


EURUSD has already begun the reaction from the daily pivot and the trendline resistance. As far as I can see, however, price seems to be heading towards the demand zone as marked since it was the "order block" right before price broke the previous high with a bullish FVG (Fair Value Gap).

Analysts’ Expectation: 

Direction: Bearish

Target: 1.06500

Invalidation: 1.09201

GBPUSD- Daily Timeframe


The chart above shows the price action on the daily timeframe of the GBPUSD pair, and similar to what we saw on the EURUSD daily chart, price here is also reacting from an area of resistance. The major clause here, however, is that the reaction is a tad more sluggish than I would have loved to see. The 200-Day moving average could be the next target in view as I expect price to seek out a strong area of support in order to continue its bullish march.

Analyst’s Expectations: 

Direction: Bearish

Target: 1.20624

Invalidation: 1.24539

XAUUSD - Daily Timeframe


From the Daily pivot zone, XAUUSD has played out a 300-pip bearish reaction. The point of the reaction aligned perfectly with the trendline resistance of the rising channel, indicating the likelihood that price bounces off the trendline support of the same channel to continue its bullish rally... possibly.

Analyst’s Expectations:

Direction: Bearish

Target: 1887.8

Invalidation: 1945

APPLE - Daily Timeframe


After the bearish break of structure, APPLE stock returned to the rally-base-drop supply zone that prompted the break of structure in the first place. On returning to the supply zone for a retest, price encountered the trendline resistance and was kicked down from that area of confluence. This leads me to expect a brief continuation of that bearish movement to the demand zone I marked below as the primary target.

Analyst’s Expectations: 

Direction: Bearish

Target: $137

Invalidation: $148


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.


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How Did EUR React to the ECB Meeting? 
How Did EUR React to the ECB Meeting? 

The European Central Bank (ECB) has raised interest rates by 25 basis points, marking its tenth consecutive rate hike since July 2022 and bringing the total increase to 450 basis points. The ECB is primarily concerned about high inflation levels, both current and projected, with concerns extending into the future.

Can the CPI Release Reverse The USD? 
Can the CPI Release Reverse The USD? 

The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.

Will the NFP help the greenback?
Will the NFP help the greenback?

The odds of a final interest rate hike by the US Federal Reserve (Fed) this year have dropped after US job openings hit their lowest levels since early 2021. This has led to a correction in the US Dollar as traders reduced their bets on further rate hikes.

Latest news

Gold is Rising Despite Inflation Returns
Gold is Rising Despite Inflation Returns

Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.

Can the Chinese Economy Recover?
Can the Chinese Economy Recover?

Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.

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