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September 22, 2022

Why the New FOMC Decision Matters

Michael J. Donoghue
Why the New FOMC Decision Matters

Yesterday, the Federal Open Market Committee (FOMC), the Federal Reserve’s policy-making body, implemented yet another 75 basis point interest rate hike. While this move was perfectly in line with market forecasts, Chair Powell’s comments following the subsequent press conference, in which he discussed the FOMC’s new set of economic projections, were significant. He continued to emphasize the Fed’s commitment to bringing year-over-year inflation back down to 2%, even at the expense of short-term economic growth, offering little in the way of dovishness. These events may become key fundamental catalysts for further bullish USD price action and stock selloffs, hence why the new FOMC decision matters.

Top Pairs to Trade

Because the Federal Reserve has re-upped its commitment to contractionary monetary policy, which is favorable for the US Dollar’s value in the forex market, USD bulls have ever more reason for fundamentals to be on their side. The following pairs are among the EdgeFinder’s top recommendations for USD bulls, as can be seen with their respective ratings and biases/signals. The first three pairs have either broken through or just touched support, with potential breakouts to the downside seeming plausible. The fourth pair, USD/JPY, sold off today before finding some support, while even more buying pressure seems likely in light of the Bank of Japan's decision yesterday to continue their ultraloose monetary policy.

1) EUR/USD (Receives a -7, or ‘Strong Sell’ Signal)

Why the New FOMC Decision Matters
Why the New FOMC Decision Matters

2) GBP/USD (Receives a -6, or ‘Strong Sell’ Signal)

Why the New FOMC Decision Matters
Why the New FOMC Decision Matters

3) AUD/USD (Receives a -4, or ‘Sell’ Signal)

Why the New FOMC Decision Matters
Why the New FOMC Decision Matters

4) USD/JPY (Receives a 4, or ‘Buy’ Signal)

Why the New FOMC Decision Matters
Why the New FOMC Decision Matters

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Why the New FOMC Decision Matters

Yesterday, the Federal Open Market Committee (FOMC), the Federal Reserve’s policy-making body, implemented yet another 75 basis point interest rate hike. While this move was perfectly in line with market forecasts, Chair Powell’s comments following the subsequent press conference, in which he discussed the FOMC’s new set of economic projections, were significant. He continued to […]

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