FOMC Minutes: Good stuff, but nothing markets didn’t already assume

The FOMC Minutes showed the markets what many investors have already known, in particular:

Many Fed officials said 1 or more 50bps hikes may be warranted
FOMC backs roll off cap phase-in of 3 months or modestly longer
$95 billion month cap for asset runoff likely appropriate (markets were looking for $80-$100 billion)

However, this seems to be old news as Fed member after Fed member has been more “hawkish leaning” since the March 16^th meeting. Fed Chairman Powell spoke in mid-March and said that “if the Fed needs to tighten above neutral rate, it will do so.” In addition, when asked what would prevent a 50bps hike at the May meeting, Powell replied “nothing!”. Yesterday, the Fed’s Brainard said that the “Fed is prepared to take strong action if inflation and inflation expectation indicators suggest a need for such action”. Regarding the balance sheet, she indicated that the Fed could begin to reduce at a “rapid” pace. In addition, the Fed’s George said that a 50bps hike is an option we have to consider. Today, the Fed’s Harker and Barkin echoed these same sentiments.

The DXY continued its assault higher towards the 100 level. First resistance is at the 127.2% Fibonacci extension from the high of March 7^th to the lows of March 30^th, at 99.89. If price can trade above there, the next resistance level is psychological round number resistance level at 100.00, then the 161.8% Fibonacci extension from the same recently mentioned timeframe at 100.49. First support is at today’s low near 99.31, then the top, upward sloping trendline of the long-term channel near 99.00. Below there, the DXY can fall to horizontal support at 98.43.

Source: Tradingview, Stone X

GBP/USD has been moving lower aggressively lower since making a near-term high on January 13^th at 1.3788. On March 14^th, the pair tested the 127.2% Fibonacci extension from the lows of December 8^th, 2021 to the highs of January 13^th, near 1.3000. Price failed to break below and bounced to resistance near 1.3273. GBP/USD is now moving lower and appears to be trying to test the 1.3000 level once again. If price breaks below, horizontal support from November 2020 is at 1.2854, then the 161.8% Fibonacci extension from the same timeframe near 1.2793. Resistance is at the March 23^rd highs of 1.3298, then horizontal resistance at 1.3486.

Source: Tradingview, Stone X

The Minutes from the March 16^th FOMC meeting had some good information, however they were a bit stale, as almost all Fed speakers have been hawkish lately. However, the DXY did continue its move towards 100.00 and GBP/USD tried to get near 1.3000. If the hawkish signals continue from Fed officials, prices may reach those levels soon.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.