The Fed is due to announce its policy decision | 21 Septiembre 2022

21 Septiembre 2022, EUR/USD

The Fed is due to announce its policy decision

EURUSD trading plan:

The yield on two-year U.S. Treasury notes, a rough gauge of interest rate expectations, rose to almost a 15-year high, a day before the Federal Reserve is likely to hike rates by 75 basis points as it continues to fight inflation. The two-year is highly sensitive to shifts in monetary policy expectations and early it hit 3.99%. The last time its yield broke above 4% was Oct. 18, 2007. The Fed is due to announce its latest policy decision on Wednesday. Money markets are fully pricing in a 75-basis point rate hike, with the chance of a larger full-point rate hike fading to just 16%, according to CME's FedWatch tool. The closely watched gap between two- and 10-year yields earlier reached a discount of as much as -47.5 basis points, approaching its most negative since Aug. 10 when the discount widened to -56.2 basis points. The gap later narrowed to -39.8 basis points.

Investment idea: sell 0.9945 and take profit 0.9868.

David Johnson
Analyst of «FreshForex» company
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