4 min read The Federal Reserve hiked interest rates by 25 basis points, in line with expectations, taking the rate to 3.75%-4%. The vote was unanimous.
The dot plot showed that 16 officials projected at least one more 25 bps hike in 2026, while four officials projected two more rate hikes this year, bringing the total to 75bps in 2026.
Fed officials revised the GDP estimate up to 2.3% from 2.2%. The economy has grown more than expected this year, which could also contribute to faster inflation. The inflation forecast rose by 0.1%, and the unemployment forecast fell to 4.1% from 4.3%.
The meeting comes as oil prices remain high, adding inflationary pressure, and as the economy remains resilient, with consumers still spending well after solid retail sales data earlier today.
US stocks are turning negative as Fed Chair Warsh starts the press conference and the USD is rising.
DOLLAR INDEX (DXY):
The US Dollar Index has risen following the FOMC rate decision. The USD trades above 100.00 at a 6-week high. The price is extending gains above the 200 EMA, taking out the September 2 resistance. The RSI is deeply overbought so there could be a pull back or consolidation. Buyers will look to 100.40 as the next target.
EURO vs DOLLAR (EUR/USD):
If we take a closer look at the technicals, we can observe how the EUR/USD price has fallen aggressively following the FOMC rate decision. The price broke below the 1.15 level and the 50 EMA is set to cross below the 200 EMA in a death cross bearish signal. The RSI is oversold. Sellers could look towards 1.14. A rise above 1.1530 could stabilise the price action.
S&P 500 (SDX):
The S&P 500 has fallen sharply lower, dropping below 7565 its lowest level in 6 weeks. The price trades in a descending channel and the 50 EMA has crossed below the 200 EMA in a bearish signal. Sellers will look to take out the lower band of the falling channel as the next level of support ahead of 7500 and 7400.
Trading involves risk.
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