The focus for traders this week will be on the monetary policy announcement from the Federal Reserve on Wednesday. Although no interest rate changes are expected, the central bank is likely to unveil an updated forward guidance policy.
According to consensus expectations, the Fed is likely to maintain its key interest rate at the present range of 5.25% to 5.50%. However, the central bank may drop its tightening bias from the post-meeting statement, effectively signaling a transition towards an easing stance. This transition may be prompted by the need to protect the labor market and prevent economic damage due to a potential economic slowdown.
From a technical point of view, the outlook for gold, USD/JPY and the Nasdaq 100 will be significant amidst the Fed’s announcement. Gold prices have retraced their gains but could retest critical levels if further weakness ensues. On the other hand, USD/JPY rallied after rebounding off the 100-day simple moving average, with a focus on primary resistance at 148.20, then 149.00. Similarly, the Nasdaq 100 remains in an uptrend but is likely to experience a correction soon due to overbought market conditions and significant resistance near 17,790.
With regards to the US dollar’s outlook, the Fed’s decision may lead to significant changes in yields and the U.S. dollar value, affecting both the equity markets and gold prices. Therefore, investors and traders should keep a close eye on these three assets to assess the potential impact of the Fed’s monetary policy announcement.
Insight: The Fed’s monetary policy announcement can have a significant impact on multiple markets and assets, including gold, USD/JPY, and the Nasdaq 100. Traders should be prepared to adjust their positions and strategies based on the Fed’s forward guidance and its potential impact on the U.S. dollar and equity markets. Additionally, the technical outlook for gold, USD/JPY, and the Nasdaq 100 highlights the potential trajectory of these assets in response to the Fed’s announcements.
