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FOMC Policy Decision May Help US Dollar Rise Again

Published on: 10/2/18 10:21 AM

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Category: Currency, Forex, Latest News, Market, Trading, US News, World News



US Dollar still going down ?


For the second-straight week, the US Dollar (USD) has seen a serious downward trend in terms of price action. For the most part, it appears that this is due to an upcoming policy announcement due next week via the Federal Reserve. Those who are bullish are hoping that the news will help turn things positive again in terms of the USD’s rise.

Next week, the Federal Reserve Open Market Committee (FOMC) will meet on Tuesday and Wednesday. It’s expected that the FOMC will decide to make another rate hike, as the odds are high for this happening. If it does, it will be the third time this year that the rate has increased. It’s well known that the latest rate hike is already priced into the market. There’s also a strong chance that there will be another rate hike coming in December.

Due to the fact, the potential hike is priced in, most people will be focused on what Fed. Reserve Chairman Jerome Powell has to say during the press conference after next week’s two-day meeting. Those individuals interested in currency trading will be watching to see if the Fed’s language tends to be different than what’s expected for the future of the dollar. It that language deviates, people could see surprising movement for the US Dollar.

Concerns for a trade war


Despite concerns about an escalating trade war and potential instability in the Forex market, the USD has seen support thanks to those seeking havens for their capital flows. The worries over those issues have since faded, giving traders good reason to accept USD sales data.

While the US Dollar experienced a bounce-back of sorts on Friday, the past two weeks’ heavy losses may have some individuals worried. However, this downward trend doesn’t seem like it will last too long. The USD’s yield appeal should keep it strong as long as sentiment is also in its favor moving forward. Once the FOMC’s announcement has officially come out, USD should start to make its climb up again.

In contrast, gold may move lower following the upcoming FOMC announcement. It showed a bit of a rally this past week but ended up only a small bit higher than where it opened for the week. There have also been several indications on the hourly chart that gold is testing short-term support levels. It should be interesting to see how it moves in the days and weeks following the upcoming Federal Reserve decision news.