No Change But it Could Have an Impact on the Forex Pairs
The Fed’s interest rate decision will grab the center of attention this week as hopes for an interest rate cut now seem to be fading into the distance. Even though the Fed mentioned at its last meeting that the economy seems to be showing signs of improvement, recent numbers might not be enough to shift the Fed into a more tightening stance.
According to the Fed’s prior statement:
- Household spending expanded at a moderate rate, though it remains constrained by a weak labor market, modest income growth , lower housing wealth and tight credit
- Businesses are still reluctant to add payrolls
- Financial conditions have improved but there is still weakness in certain parts of the sector. Recent bank reports have also disappointed with weaker results
Despite the improvement, recent inflation figures dampened any signs of a rate hike as prices increase at a lower than expected rate. CPI climbed by a mere 0.1%, following a 0.4% gain in November, while the core figure, which excludes food and energy costs also increased by 0.1%.
To date companies are able to raise prices with unemployment still at high levels. According to the Fed inflation is expected to stay “subdued”.
Even though the Fed is expected to maintain the target range for the federal funds rate at 0-0.25% and continue to provide support to mortgage lending and help the credit market through mortgage backed securities and agency debt, the release could have impact on the intraday session and present investors with a nice intraday trend.
Technical Analysis – A Possible Trade Opportunity
USD/JPY- Daily Chart
Bullish Scenario – A Break above the upper trend line resistance could present the start of a new bullish trend.
Target A – 91.0
Target B – 92.0
Bearish Scenario – A drop below support could lead to a drop to prior support around
Target A – 89.0
Target B – 88
Analysts Expectations
| Data | Predicted Result | Last Result |
| Interest Rate Decision | 0.25% | 0.25% |
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