Federal Reserve Interest Rate Decision : A hawkish hold

The Federal Reserve left interest rates unchanged for a fourth straight meeting. The vote was unanimous to leave rates at 3.5%-3.75%. 

The Fed dropped its easing bias, and the statement was reduced by 60% as the new Fed Chair Warsh implemented some changes. Warsh said in his press conference that he wants the Fed to explain less.

The Fed upwardly revised its inflation forecast, with core CPI seen rising to 3.3%, well above the 2.7% priced in back in March. 9 of 18 policymakers see a rate hike before the end of the year. This is more hawkish than the market expected, with investors now fully pricing in a 25-basis-point hike in 2026.

The U.S. Treasury yields are rising, the S&P 500 has fallen to session lows, and the USD is rising.

DOLLAR INDEX (DXY):

The US Dollar Index has jumped following the FOMC rate decision. The USD trades above 100.00 at a weekly high. The price trades above its rising trendline and has pushed above its 50 SMA in a bullish move. Buyers will look towards 100.25, the June high, to extend the bullish move.

 EURO vs DOLLAR (EUR/USD):

If we take a closer look at the technicals, we can observe how the EUR/USD price has fallen sharply following the FOMC rate decision, dropping below the 50 SMA to 1.1545, a weekly low. Sellers will look towards 1.15, the June low.

S&P 500 (SDX):

The S&P 500 has formed a lower high. The index ran into resistance at the falling trendline at 7575 and has moved lower, although remains above its 50 and 200 SMAs. Sellers would need to take out these supports at 7440 for bears to gain traction towards 7430 and the 7250 support zone.

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