Policymakers at the Federal Reserve meet again later today at 22:00 (GMT +4), to determine the latest level of interest rates. There are overwhelming expectations for the Fed to pause its rate hikes, fixing them at 5.25% after 10 previous consecutive hikes.
The focus of both the markets and the Fed is knowing the range of target interest rates which the Fed considers sufficient to bring inflation back towards its target of 2%. The Fed is also keeping in mind in negative economic effects caused by high interest rates. Declines in GDP to 1.3% is the best evidence of this. There are fears that these damages will extend to multiple economic sectors. So the Fed’s main aim is to control inflation, without dragging the economy into a severe recession.
As usual, the spotlight will be on the press conference of Fed chairman, Jerome Powell, which follows the interest announcement. Therefore, the conference is expected to bring volatility to the markets, and it will be difficult to build expectations for price movement coinciding with the announcement of interest rates as well as during the press conference. This is because it mainly depends on the terminology used by the Fed chairman.
According to analysts, the expectations are as follows.
1. The Federal Reserve will leave the door open to all expected possibilities, especially since inflation, despite its continued slowdown, is still considered high.
2. The occurrence of new fluctuations in prices between highs and lows, which will take some time before stabilizing and taking a specific path.
3. Using terms indicating the continuation of tighter policy. According to analysts, this may be positive for the dollar and negative for stocks, metals and other currencies. But any hints indicating the end of monetary tightening may be in favor of stocks and metals, while at the same time weighing down on the dollar.
Therefore, we should note that traders have different ideas and convictions in the way they interpret the information issued, and therefore prices cannot move 100% according to that information. Therefore, it is advised to take the following action.
1. Monitor open positions for the possibility of price fluctuations throughout the day without excluding any surprises of price movement.
2. Rely on the main support and resistance levels to follow the price movements by using the chart within a daily timeframe and not relying on the intraday support and resistance levels.
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