A tense Forex market awaits Fed’s rate announcement today

Rick Steves

“While the consensus amongst analysts leans towards unchanged interest rates, uncertainties persist regarding the hints that may surface in the policy statement and during the press conference.”

As the trading world turns its eyes towards the Federal Reserve’s imminent rate decision, the US dollar is experiencing a phase of relative stability against major currencies as the European trading session unfolds.

The Forex market appears to be in a holding pattern, with traders adopting a cautious wait-and-see approach. This anticipation is primarily due to the Federal Reserve’s scheduled rates announcement and the subsequent press conference later today.

While the consensus among analysts points towards unchanged interest rates, there remains a palpable sense of uncertainty. Market players are keenly awaiting any indications from the policy statement and the nuances of the press conference.

A critical question looms large over the session, said Ricardo Evangelista, Senior Analyst at ActivTrades, offering expert insights into the current state of the Forex market.

“USD direction likely to hinge on the revelations from today’s events”

“As the European trading session gets underway, the US dollar is trading relatively flat against a basket of other major currencies,” said Ricardo Evangelista. “Traders find themselves in a wait-and-see mode in anticipation of the Federal Reserve’s rates announcement and subsequent press conference, both scheduled for later today.”

“While the consensus amongst analysts leans towards unchanged interest rates, uncertainties persist regarding the hints that may surface in the policy statement and during the press conference. The burning question remains: Will Jerome Powell maintain a hawkish stance, or will he disclose enough information to rekindle the optimism of those betting on a rate cut in March? Regardless of the outcome, the short- to medium-term dollar direction is likely to hinge on the revelations from today’s events.”

The most recent decisions and outlooks from the Federal Reserve indicate a cautious approach toward interest rate adjustments. As of late 2023, the Fed maintained its benchmark overnight interest rate within the range of 5.25% to 5.50%. This decision was influenced by a variety of economic factors, including the strength in household spending and broader economic uncertainties.

Despite holding rates steady since July 2023, the Fed has begun signaling a shift towards a more relaxed policy. This change is partly attributed to cooling price pressures. For instance, the personal consumption expenditures price index, a key inflation measure preferred by the Fed, showed a 2.6% increase in December from the previous year, which is now running below the central bank’s 2% goal on a six-month and three-month annualized basis.

Looking into 2024, Federal Reserve policymakers, including New York Federal Reserve President John Williams, have indicated the possibility of rate cuts. Williams expects restrictive policy to continue through the next year, with a likelihood of rate reductions in 2024 as inflation pressures ease. However, the exact timing and scale of these potential rate cuts remain subject to the evolving economic landscape.

The Federal Reserve’s minutes from the most recent rate decision, published in early 2024, reveal that officials expect interest rates to remain high for some time to address persistent inflation. They anticipate up to three rate cuts in 2024, though they caution that inflation remains above the central bank’s target. The Fed aims to achieve a “soft landing,” balancing the reduction of inflation without triggering a significant economic downturn.

  • Read this next

    Retail FX

    Weekly Roundup: FX prop firms switch to cTrader, who moved $1.35B BTC?

    The foreign exchange and cryptocurrency markets are always active, and this past week was no exception. Stay ahead with a selection of essential stories and updates that matter most to market participants.

    Digital Assets

    Bitcoin breaks all records with a massive $1.347 billion transaction

    This transaction has surpassed previous records, setting a new benchmark for Bitcoin trades. Before this event, the largest Bitcoin transactions included a $1.1 billion trade in April 2020 involving 161,500 BTC, and other significant transactions ranging from $491 million to $1.033 billion throughout 2019 and 2020.

    Digital Assets

    Uniswap debuts Ethereum ‘uni.eth’ subdomains

    Decentralized exchange platform Uniswap has integrated Ethereum Name Service (ENS), allowing users to create human-readable domain names and cryptocurrency wallet addresses using .eth endings.


    Magic Square Expands with TruePNL Acquisition

    Binance’s web3 app store, Magic Square, acquired token platform TruePNL in a cash deal this week for an undisclosed sum. The deal brings TruePNL’s infrastructure (excluding branding & token) under Magic Square’s wing. Initially seeking a partnership, Magic Square opted for a full acquisition.

    Crypto Insider

    The Future of Prediction Markets? Zeitgeist Launches Decentralized Court System

    Polkadot-powered prediction market protocol Zeitgeist has announced the launch of its latest innovation: a decentralized court system.

    Digital Assets

    Crypto exchange Kraken fires back at SEC lawsuit, claiming overreach

    Crypto exchange Kraken is pushing back against the U.S. Securities and Exchange Commission (SEC), seeking to toss out a lawsuit that accused the platform of operating without proper registration.

    Industry News

    Exness Named a Best Place to Work in 2024

     Global leader Exness, tops in retail trading volume, earns 2024 “Best Place to Work” award, cementing its employee-centric culture after three prior years of winning the Cyprus national title.

    Digital Assets

    Swan Bitcoin taps Bakkt for crypto offering in the US

    “We are thrilled to be taking this exciting step forward in our partnership with Swan. This is just the beginning of our collaboration, as we intend to explore further growth opportunities together in the future, including expansion into international markets.”

    Digital Assets

    Polkadot Awards Bifrost a 500,000 DOT Loan to Enhance Liquid Staking Adoption

    Bifrost, a leader in liquid staking solutions, has secured a 500,000 DOT loan from Polkadot’s treasury to expand the reach and utility of its vDOT product within the ecosystem.