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During the session today, there is an interest rate announcement and FOMC Statement coming out of the United States. Because of this, there is a lot of volatility just waiting to happen and therefore this could be one of the more dangerous sessions to trade. Nonetheless, there are several things that could happen and therefore we need to keep these in mind ahead of these announcements.

1 – The US dollar will be greatly influenced by what happens with the FOMC statement. If there is a sign that there is going to be continued rate hikes, that will be very bullish for the US dollar, therefore making the currency gain extreme value against most currencies out there. It is our opinion that the market is essentially looking for a “one and done” policy out of the Federal Reserve, which means that there might be a little bit of disappointment when it comes to the value the US dollar. This is really going to come down to the statement more than anything else, as it gives us future expectations.

2 – The reason we think that the market is essentially “leaning” to the side of the Federal Reserve been very calm is that the EUR/USD pair formed a very bullish candle. This is essentially “front running” the announcement, and a lot of times the market will show you what it expects. With this, we believe that unless the Federal Reserve explicitly says that they are going to have several rate hikes, the US dollar will probably soften a bit.

3 – If that’s the case, we will have to see what happens in the stock markets. Personally, we believe that it is much simpler to trade European indices as opposed the US indices, because there will be extreme amounts of volatility and confusion after the statement. On top of that, most of the trading session in America will simply be back and forth low volatility as we await the announcement in the afternoon.