Trading Insights: The Fed is on track, will they kill the US100 rally today?
US Fed interest rate decision due today at 6 PM UTC
Today's focus is not on the rate increase, but on how the Fed will communicate how it will respond to the slowdown in inflation during the previous 12 months.
The above chart illustrates the 12-month trend in US Core Consumer Price Index (CPI)
600% increase in US interest rates during the 12 month US rate hiking cycle.
Today the US Fed is expected to increase interest rates by 0.25%, by this evening the US Fed Funds Rate could be at least 5.5%.
Today, the rate is 5.25%.
One year ago the Fed Funds Rate was just 0.75%. That is a 600% increase during the last 12 months.
The Fed is on track to completion of its core missions:
- Price stability
- Maximum employment
US unemployment remains near historical lows.
US100 Index +42% year-to-date
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Today’s economic calendar
US Fed interest rate decision due at 6 PM UTC
- It's expected to raise +0.25%
- Current interest rate 5.25%
- Expected new rate 5.50%
Source: TradingView / J. Knobel July 26 2023 6:38 AM UTC
Today’s price action spotlight
EUR/USD strong support spotted near the 1.0940s
EUR/USD current price 1.1065 is -140 pips below its 5 day highs, the recent price pullback appears to be another corrective downside move since the start of the EUR/USD multi-month uptrend (see chart). Further downside remains on the table with the key support near the 1.0940s as a likely resting area in the very short term (1-13 days). Provided price support holds, an attempt to retest the 52 week highs near 1.1275 can not be ruled out, which if cleared opens the door for a further extension towards the 1.1350s. Downside below the 1.0940 key support.
Gold keeping alive the prospects for a return above $2K?
Gold's current price $1,969 is above its 50 day simple moving average. Higher tops and higher bottoms observed on price since the June 29th lows - July 20th highs indicate bullish contentions for the medium term (26-49 days). Above the key support seen near the $1,950s, upside prospects for a return above $2,000 for a test of the May 12th highs near $2,020 can not be ruled out. Downside risk below the $1,950s could expose the $1,880s (see chart).
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Not investment advice. Past performance does not guarantee or predict future performance.
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