How to Trade on FOMC Press Conference?

What will happen?

FOMC press conference is among the primary methods the Fed uses to communicate with investors regarding monetary policy. It covers in detail the factors that affected the most recent interest rate and other policy decisions, along with commentary about economic conditions such as the future growth outlook and inflation. Most importantly, it provides clues regarding future monetary policy.

Today, on September 22, traders await FOMC’s tapering decision as it will make a huge impact on the markets. In this article let’s discuss two possible variants of the FOMC statement and imagine how they will affect the market.

Possible variants

Dovish statement. Powell says that the US economy still needs stimulus and doesn’t call any dates when the tapering might begin. In this case, the US dollar will get weaker.
Hawkish statement. Powell calls the possible date of stimulus tapering (the further the date, the shorter will be the effect on the markets) and says that the government needs to take control over inflation. In this case, the US dollar strengthens.

Asset’s technical overview

US dollar index daily chart

In the 1^st scenario, the US dollar index will drop down to 92.3 support level, in case, of breakout the next target will be 91.5. USD/*** will fall. ***/USD will rise.

In the 2^nd scenario, the US dollar index will surge to 93.7 and 94.4 resistance levels. USD/*** will rise. ***/USD will fall.

Gold (XAU/USD) daily chart

In the 1^st scenario, XAU/USD will surge with the main target at $1839.

In the 2^nd scenario, XAU/USD might drop down and touch the $1680 support level.

S&P500 (US500) daily chart

1^st scenario will send S&P500 to 4450 and 4480 resistance levels.

2^nd scenario will open a road to 4250 and 4150 support levels.

Bitcoin daily chart

1^st scenario will make bulls push Bitcoin up to $47 000.

2^nd scenario will send the main cryptocurrency down to $37 600 and probably even $30 000 levels.

TRADE NOW

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Author: FBS Analyst Team

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