FOMC Meeting this week - Rising Interest Rates!

Weekly Market Insight – 31^st October 2022

S&P 500 jumped higher on Friday by 2.46% on the investors' improved risk appetite. Dow Jones was up by 2.59% and Nasdaq was up by 2.87%. Tomorrow, the Federal Reserve is due to meet for a policy decision on interest rates. The US inflation in September was 8.2%, the lowest in the past 7 months. The next CPI data is due on 10^th November and the Market is forecasting it to be close to 8.1%.

US500 Daily Chart Directional bias - 2 Weeks 

Trade Insights – US500

The chart shows viable short positions below the pivot at 3910 heading towards the target of key support level @ 3810 and then the further test of the support zone between 3730 to 3700.

Alternatively, possible long positions above the pivot at 3910 with the target to test the key resistance Level at 3980 and then the test of the resistance zone between 4060 to 4090.

US Interest Rates

The Federal Reserve Policymakers are due to meet on 1-2 November to decide on further Interest rate hikes to tame inflation. If the Feds believe that the rates are already at a sufficiently restrictive level, then they would maintain that level for some time and could surprise the market tomorrow. The minutes from the September FOMC meeting showed that the fed policymakers are of the view that they need to take a more restrictive policy stance to promote maximum employment and price stability. They agreed that hiking rates faster now would “prevent the far greater economic pain associated with entrenched high inflation.” The Fed raised the federal funds rate by 75 bps to the 3%-3.25% range during its September meeting. This has pushed the borrowing costs to the highest since 2008.

EUR/USD – Euro dropped after the ECB meeting.

Chart Analysis: The EUR/USD charts show that the pair dropped sharply and now the investors are struggling asses the direction Euro will move into. As the Federal Reserve is due to meet tomorrow and is expected to implement another 75bp rate hike, the fate of the Euro is tied to the Fed Rate Decision.

Please check the Chart Trading Insights below -

• Resistance Zone: 1.0166 to 1.0216
• Key Resistance Level: $1.0087
• Major Pivot Point: 0.9989
• Key Support Level: 0.9870
• Support Zone: 0.9710 to 0.9660
• 200 Day SMA – Green Line
• 50 Day SMA – Red Line
• 20 Day SMA – Blue Line

Daily Chart Directional bias - 2 Weeks 

Trade Insights – EURUSD – Chart shows viable short positions below the major pivot point at 0.9989 heading towards the first target of key support level at 0.9870. Then further test of the support Zone at 0.9710 to 0.9660

Possible entry of short positions below the major pivot at 0.9989

Potential first-take profit could be at – 0.9870

Potential Second take profit could be at – 0.9710 to 0.9660

Alternatively, possible long positions if Euro jumps above the major pivot point at 0.9870 with the target to test the key resistance level at 1.0087 and then the test of the resistance zone between 1.0166 to 1.0216.

Possible entry for long trades if above the major pivot point at 0.9989

Potential first-take profit could be at – 1.0087

Potential second-take profit could be at – 1.0166

Potential third-take profit could be at – 1.0216