The hawkish Fed | 26 January 2022

26 January 2022, EUR/USD

The hawkish Fed

EURUSD trading plan:

Investors have been unnerved in recent days about the potential for a more hawkish Fed than previously expected. Some are concerned an aggressive interest-rate-hiking cycle, combined with a reversal of the U.S. central bank's bond-buying program, could cause too sharp a slowdown. A hawkish stance by the Fed, which concludes its latest two-day policy meeting, has pushed up short-term rates, flattening the closely followed yield curve on U.S. Treasuries. The yield curve between 2-year and 10-year notes flattened to less than 74.9 basis points on Wednesday, the smallest gap since Dec. 28. This is a positive signal for the dollar.

Investment idea: sell 1.1320 and take profit 1.1260.

David Johnson
Analyst of «FreshForex» company
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