Forex Chart Of The Day: USD Index, What Will The Fed Do?

What will the Federal Reserve do? In this video we discuss the Federal Funds Rate moving higher by 25 basis points. But how will it impact the USD Index?

Watch the video to learn more… 

USD Index Analysis

The Federal Reserve is expected to increase interest rates by 25 basis points, bringing them up to 5.25%. This move is a response to rising inflation levels, which have been hovering around the 5% mark in recent months. While this is lower than the peak of 9.1% seen earlier in the year, it is still higher than the Fed’s target of 2%.

Investors will be closely monitoring the press conference that follows the rate hike announcement. They will be looking for indications that the Fed plans to pause in the next meeting, given the uncertain economic environment. The central bank has been cautious in its approach to monetary policy in recent months, emphasizing the need for a gradual and measured response.

The decision to hike rates signals the Fed’s commitment to keeping inflation under control, even as the US economy continues to recover. However, the central bank will need to carefully balance its response to inflation with its desire to support economic growth, particularly given ongoing concerns around global supply chain disruptions and rising commodity prices.

USD Index

The price on the chart has traded through multiple technical levels and some observations included:

• The price of the USD Index is hovering above the key support of 101.00.
• Price has failed to rally from this support, showing a lack of buying intent.
• Price is also trading within a bearish channel, with 102.00 highs. 
• If this breaks price could trade to 103.00, however if the USD remains bearish price could trade through 101.00.

Have you watched our AUDJPY analysis? You can see it here. 

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About The Author

Jonathan Kibbler

Jon Kibbler, our Senior Market Analyst, boasts over a decade of trading experience. He specializes in dissecting the intricacies of financial markets and sharing his expertise with precision. Jon’s insights have been featured at renowned events and platforms like Coindex, Forex Analytix, and Forex.com.

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