The Fed delivering increases | 25 Abril 2022

25 Abril 2022, EUR/USD

The Fed delivering increases

EURUSD trading plan:

Fed Chair Jerome Powell gave a "go" sign to a half-point hike then and signaled he would be open to "front-end loading" the U.S. central bank's retreat from super-easy monetary policy. Those remarks solidified traders' bets on a rise in short-term borrowing costs to the 0.75%-1% range at the Fed's May 3-4 meeting, and sent them newly piling into expectations for bigger hikes in June and July. The Fed's policy rate signaled a more than 80% chance of another 1.5 percentage point increase in the fed funds rate, to the 2%-2.25% range, by the close of the Fed's July 26-27 meeting. But with inflation as high as it is -- consumer prices rose 8.5% last month, well above the Fed's goal of 2% -- some observers say interest rates will need to rise even further for the "real" cost of borrowing to be high enough to start biting into economic activity.

Investment idea: sell 1.0760 and take profit 1.0695.

David Johnson
Analyst of «FreshForex» company
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