TRADING THE NEWS: FEDERAL OPEN MARKET COMMITTEE (FOMC) INTEREST RATE DECISION

DailyFX Calendar

The Federal Open Market Committee (FOMC) interest rate decision may rattle the recent rebound in EUR/USD as the central bank is widely expected to raise the benchmark interest rate to a fresh threshold of 1.50% to 1.75%, but a dovish rate-hike may produce headwinds for the greenback as it dampens the scope for a more aggressive hiking-cycle.

Fed Fund Forecast

Market participants are likely to pay increased attention to the updated forecast coming out of the FOMC as the committee appears to be on track to further normalize monetary policy over the coming months. Chairman Jerome Powell and Co. may continue to prepare U.S. households and businesses for higher borrowing-costs as ‘a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate,’ and a fresh batch of hawkish rhetoric may generate a bullish reaction in the U.S. dollar as it boosts bets for another rate-hike at the next quarterly meeting in June.

However, more of the same from the FOMC may drag greenback as it curbs speculation for four rate-hikes in 2018, and ongoing projections for a longer-run Fed Funds rate of 2.75% to 3.00 may ultimately fuel the near-term rebound in EUR/USD as Chairman Powell and Co. appear to be on a preset course.

IMPACT THAT THE FOMC INTEREST RATE DECISION HAD ON EUR/USD DURING THE PREVIOUS MEETING

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JAN

2018

01/31/2018 19:00:00 GMT

1.25% to 1.50%

1.25% to 1.50%

-2

-6

January 2018 Federal Open Market Committee (FOMC) Interest Rate Decision

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