Market Overview

28 April 2021

The Fed to Break Dollar Equilibrium

The primary intrigue of the Federal Reserve (the Fed) meeting this week is whether the U.S. monetary regulator would manifest perseverance in earlier declared loose monetary policy. Many external factors prompt this policy should be at least tighter than at the moment: inflation growth exceeding Fed’s projections, increasing employment, forecasts over unprecedented economy growth in the United States, additional fiscal stimulus measures from Joe Biden’s Administration. These factors are raising questions over tapering ultra-soft monetary policy earlier than 2023 that was declared be the Fed before.

However, Fed’s Chair Jerome Powell has repeatedly reiterated that monetary regulator can wait for a long time for higher inflation over the target of 2% that was abandoned last year as an upper limit. The Fed could even consider risks of economic overheat in this regard. Fed’s patience a largely come from fears over uneven decrease of the pandemic in different countries. A recent spike in infections in Japan and India is another confirmation that such assumptions could be quite serious.

The market assumes that dovish monetary policy maybe continued, but also notes of hawkish approach might be added. Those assumptions may curd the U.S. Dollar index movements while it is resting mostly on the same readings close to 91 points this week.

Federal open market committee (FOMC) meeting today may nudge the Dollar in either direction while the Greenback is moving in the downward trend. Technical picture suggests that the Dollar index may decline further to 89.2-89.9 points. Any hawkish rhetoric from the Fed may drive the index to 92-93 points while it still continues to move in a downward trend. This trend would be abandoned only if the index breaks through 94.2-94.4 points. However, it seems highly unlikely as the European Central bank and some other major central bankers keep their ultra-soft monetary policy in place.

 

Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2021 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.