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Market Outlook
Fed pours cold water on rate hike. - Zeal Capital Market

Fed pours cold water on rate hike.

05-05-2022 03:19

”Powell: We are not considering 0.75% rate hikes for now.”

Federal Reserve delivered their monetary policy as expected, raising interest rates by 50 basis points to a range of 0.75% – 1.00%. Concurrently, they announced to start trimming their massive balance sheet next month, a calculated move to limit inflation from derailing US economic momentum. In the press conference, Fed Chair Jerome Powell emphasized that Russia-Ukraine war has fueled higher inflation due to energy supply crisis. However, he dismissed the course for a higher basis point rate hike in the future, citing possible peak of core inflation which only rose slightly in March. Following his remarks, US dollar fell sharply, erasing almost 1% of gains it has made last week.  

Quick recap on USDCHF

The pair failed to extend its gains even though successfully closing above the hurdle of 0.9785 in the lower timeframes.

USDCHF Weekly Technical Analysis

Fed pours cold water on rate hike. - Zeal Capital Market

The pair spiked up near 0.9785 before experiencing strong bearish momentum from the upside.

USDCHF Daily Technical Analysis

Fed pours cold water on rate hike. - Zeal Capital Market

From daily point of view, it is apparent that the pair failed to overcome massive bearish momentum from the upside. Overall trend is tilted towards the downside in the near-term as upside momentum continues to diminish.

Trading Idea

Fed pours cold water on rate hike. - Zeal Capital Market

ORDER: SELL STOP

ENTRY: 0.9665

STOP LOSS: 0.9795

Target 1: 0.9525

Target 2: 0.9415

ZFX Analyst’s Comment

As the market cooled off from higher basis point rate hike possibility, greenback is expected to take the back seat for the time being. A glance on dollar index shows substantial room for the currency to retrace further. Thus, non-dollar bulls may take this opportunity to make their presence heard in the near-term.

Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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