EURUSD holds the 200 hour MA on the dip and rises
The EURUSD moved down to test the 200 hour MA at the 1.4817 level and bounced higher. The low reached 1.4826. The price has now moved higher and remains in a fast market conditions. The high has extended to through the 1.4900 level The thought is the Fed was more dovish in its assessment for rates. This SHOULD encourage stocks. Higher stocks tend to encourage the risk trades. Hence the increase in the EURUSD. Low rates are likely to remain for a while still. Below are some of the minor differences.
NOW:
“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations (THIS WAS ADDED), are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”
BEFORE
“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”
The Feds clarification of the “why they will keep rates low for an extended period” makes me believe that they don’t want the markets adding fear into the market interest rates on the assumption the Fed is seeing inflation.
NOW:
“Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.”
BEFORE
“Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit ”
The change from “seems to be stabizing” to “appears to be expanding” is an improvement but it is as if they are not fully behind the expansion.
The Feds comments on inflation was exactly the same:
“With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.”
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