The hawkish tone out of the Fed | 14 December 2021

14 December 2021, EUR/USD

The hawkish tone out of the Fed

EURUSD trading plan:

Traders expect an increasingly hawkish tone out of the Federal Reserve's two-day meeting that wraps up on Wednesday. The U.S. central bank is expected to signal a faster wind-down of asset purchases, which could also usher closer a start to interest rate hikes. The central bank hiking interest rates from near zero to 0.25%-0.50% in the third quarter of next year, followed by another in the fourth quarter. Short-dated Eurodollar futures are often regarded as a proxy for traders' view on the federal funds rate, the Fed's benchmark interest rate. Shorting, or selling, these contracts imply higher rates, while going long implies the opposite. This is a positive signal for the dollar.

Investment idea: sell 1.1320 and take profit 1.1275.

David Johnson
Analyst of «FreshForex» company
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