Forex trade ideas for post FOMC session

In Central Bank newsworthy events here are some notable highlights

Yesterday decision by the FOMC leads us to believe that the US Fed is now officially behind the curve and the Fed Chair is happy with the decision while more than likely having made an error in by admitting to having to quantify what a moderately overshooting inflation rate means as soon as inflation overshoots the target. The Fed sounded more upbeat on economic projections but also kept referring to the fact that they want to see actual progress and not forecasted progress before changing anything in the policy framework. Powell made a mistake by admitting to having to quantify what a moderately overshooting inflation rate means as soon as inflation actually overshoots target. The Fed is clearly more upbeat on growth than in December for good reasons, but they still want to send a signal that inflation will be allowed to overshoot target without an immediate tightening response. They expect core PCE prices at 2.2% for this year and 2.1% in the endpoint in 2023. Four out of eighteen FOMC members see a rate hike in 2022 compared to only one in December, which is another way of showing that the Fed has turned more upbeat, but they remain extremely cautious in terms of sounding just barely tightening biased and a clear consensus still refrains from hinting of any hikes at all.

None of this came as a surprise to markets, even if markets had slowly but surely built up a tad of hawkish expectations on forehand. Otherwise, the statement included almost exactly the same guidance as last time except for a slightly more upbeat tone on activity (GDP growth projections for 2021 lifted to 6.5% from 4.2% in Dec). The immediate market reaction is accordingly slightly dovish.

Meanwhile in the UK, The Bank of England’s MPC set monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 17 March 2021, the Committee judged that the existing stance of monetary policy remains appropriate. The MPC voted unanimously to maintain Bank Rate at 0.1%. The Committee voted unanimously for the Bank of England to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £20 billion.

In Japan, Japan's central bank is poised to make monetary policy adjustments designed to increase its flexibility and make life easier for financial institutions, sources told Nikkei. During its two-day policy meeting from Thursday, the Bank of Japan will be looking at measures that would allow long-term interest rates to move in a slightly larger range of about 0.25%, plus or minus, versus 0.2% now. The idea is to maintain low interest rates while encouraging the market to function normally, giving financial institutions a chance to increase revenue.

Here is our trade ideas for the day session following some good trades that allowed us to take profits in the overnight session:

How to you interpret this as actionable trade ideas? Use the bottom of the suggested entry range as a limit order trade [long or short as indicated]. Use the stop as a discrete stop which means you stop out of the trade with your complete lot size. The suggested Profit target is only a suggestion but is the most meaningful technical point to exit your trade. Be cognizant of Central Bank public conversations while trading Forex as they effect your positions most time in an adverse fashion.