Leading up to this evening’s eagerly anticipated FOMC statement, traders took the opportunity to close some USD positions on Tuesday afternoon. Investors are showing some concerns ahead of the FOMC statement that the Federal Reserve will delay raising US interest rates until much later this year than they originally hoped for, although any optimism that the Federal Reserve will hike rates as early as March/April was always wishful thinking to be honest. In regards to the statement, we can expect it to be highlighted that low inflation levels remain a primary concern for the FOMC, and for this to be something it will be monitoring over the coming months. The FOMC are also likely to continue emphasizing that while consistent progress is being noticed in employment reports, more of the same is going to be required over the coming months.

Overall, what investors will really be interested in finding out is the most updated likely time frame for the first US interest rate hike. Any indications that the Federal Reserve are becoming hesitant towards raising rates due to fears over the global economic recovery are likely to encourage some further USD softness and install increased demand for safe-havens like Gold. On the other hand, a repeat of last month’s message where the Federal Reserve stressed it had no concerns over fears such as the unexpected decline in the price of oil and continued to have commitment to raising US rates this year will probably result in this USD weakness being temporary.

Recent economic data from the United States has led to anxiety that domestic momentum is slowing down, with this anxiety further extending when Durable Goods in December were confirmed as decreasing by far more than forecast at 3.4%. While a noticeable decline in both Durable Goods and recent Retail Sales does lead to some validity behind these concerns that domestic growth is slowing down, it is important to remember that after the previous quarter’s GDP growth was confirmed at an annualised 5%, this was always likely to be the case. For now, the Federal Reserve are likely to brush aside some of the recent data with concerns only likely to be shown if this trend continues throughout February.

With EURUSD gains limited to USD weakness, the Euro bulls really seized the opportunity to exploit the USD weakness noticed yesterday afternoon. After hitting another 11-year low at 1.1097 on Monday morning, the pair advanced has advanced as high as 1.1422. Although one of the main catalysts behind the bullish drive has been USD softness, indications that the Syriza party in Greece are willing renegotiate Greece’s bailout and reduce austerity reforms is resulting in a vote of confidence from some investors. Economic data in Europe is low in volume today, therefore any downside risks for the EURUSD would likely rest upon any sudden political instability in the Eurozone, or increased demand for the USD following the FOMC statement this evening.

The GBPUSD also surprisingly moved to the upside yesterday afternoon, with the pair transitioning from falling to 1.5092 following the UK GDP data coming in below expectations to moving to 1.5226 as the USD weakened. This pair has just benefitted from USD weakness to be honest, with a clean break needed above 1.5225 required to inspire a more bullish view for the pair. It might also be possible that the pair is entering some sort of correction stage after a month of unexpected heavy selling. Nonetheless, for the GBPUSD to continue making upside moves it is going to require further USD weakness.

Comparebroker is a comparison site and we spend hundreds of hours to keep the information up to date. However, users are advised to do their own due diligence and nothing can be perceived any advise. The content on the website is purely for education purposes only

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY off lows, stays pressured near 142.50 ahead of BoJ policy decision

USD/JPY off lows, stays pressured near 142.50 ahead of BoJ policy decision

USD/JPY has bounced off lows but remains pressured near 142.50 in the Asian session on Friday. Markets turn risk-averse and flock to the safety in the Japanese Yen while the Fed-BoJ policy divergence and hot Japan's CPI data also support the Yen ahead of the BoJ policy verdict. 

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold price treads water below record peak, awaits Fedspeak

Gold price treads water below record peak, awaits Fedspeak

Gold price hovers below the all-time peak touched earlier this week amid a bearish US Dollar and rising bets for more upcoming rate cuts by the Fed. Concerns over an economic downturn in China keep the safe-haven Gold price afloat. Fedspeak remains on tap. 

Gold News
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

Ripple (XRP) gained 2.3% since the start of the week. The altcoin’s gains are likely powered by key market movers that include Ripple USD (RUSD) stablecoin, Grayscale XRP Trust performance and the demand for the altcoin among institutional investors.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures