4 min read The Federal Reserve left interest rates unchanged for a third straight meeting. The vote was 8-4 to leave rates at 3.5% to 3.75%. Three policymakers voted to hold but against the inclusion of an “easing bias” in the statement, while 1 policymaker (Miran) voted to cut rates.
This was the highest level of dissent since 1992, highlighting the complex backdrop that the Fed is facing amid the Middle East conflict and energy price shock.
The market has now priced out expectations of a Federal Reserve rate cut, and the bar for a rate hike has been lowered.
The U.S. Treasury yields are rising, the S&P 500 has fallen to session lows, and the USD is rising. Oil prices remain elevated at around $110 per barrel, further complicating the picture. Fed Powell will speak shortly, in potentially his last meeting.
DOLLAR INDEX (DXY):
The US Dollar Index was trading higher ahead of the FOMC rate decision, and has extended those gains following the announcement, rising 0.4% to 98.85. On the 4-hour chart, the price recovered from the 98.25 recent low, pushing above the falling trendline towards the 200 SMA.
EURO vs DOLLAR (EUR/USD):
If we take a closer look at the technicals, we can observe how the EUR/USD price was trading -0.22% around 1.1685 before the decision, and post the decision, the EUR/USD has fallen to 1.1670, testing support around last week’s low. The bearish trend remains intact with a break below the 1.1670 support exposing the 200 SMA.
S&P 500 (SDX):
The S&P 500 has also seen a modest impact from the decision, with attention also turning towards big tech earnings after the close. The price was already trading -0.2% lower on the day at 7127 ahead of the decision. The price has fallen further following the decision to 7115 (-0.3%). The price has eased away from its record high near 7200, breaking out of the rising channel into a holding pattern. The price is testing the 50 SMA. A break below here brings the 7050 support into focus.
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