Fed Meeting: Slowly Getting The Taper Ball Rolling
XM Group | Jul 27, 2021 05:50AM ET
Stalling
Don’t expect much from the Fed this week. No policy changes are on the cards and there won’t be any updated economic forecasts either. This meeting will probably be used to buy time.
The US economy is booming. Inflation is running hot, consumption is strong, and the labor market is healing its wounds. Meanwhile, vaccination rates are high in most states and Congress is working on another massive round of infrastructure spending.
Normally, all this would argue for the Fed to start normalizing. But there are other elements to consider. Firstly, the Fed’s leadership believes this inflation episode will fade soon. Most of the overshoot in inflation comes down to the reopening of sectors like air travel and hotels, as well as supply chain disruptions in the car industry.
Taking a technical look at euro/dollar, initial support to declines could be found near the recent 1.1750 low, a break of which would turn the focus towards 1.1700.
On the upside, the 1.1880 zone would be the first test for buyers. If they pierce through, the next target would be around the 1.1980 region, which also encompasses the 50- and 200-day moving averages.
Beyond the Fed, there’s also the first reading of US GDP for the second quarter coming up on Friday to shake the dollar.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.