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2023-03-23 20:08

Forex fundamental analysis and review of the Federal Reserve interest rate setting meeting (March 22)

Fundamental analysis examines and analyzes the most important economic news and data and their impact on the forex market and other markets.
Forex fundamental analysis Forex fundamental analysis
In this weekly analysis, due to the importance of the US interest rate determination meeting on Wednesday, March 22, we will analyze this meeting in a specialized manner.

The US interest rate determination on March 22

The Federal Reserve will determine the US interest rate at 06 pm UTC, and market participants believe there will be a 0.25% increase. The US interest rate is currently at 4.75%.

A 0.25% interest rate increase is the second scenario that most analysts believe in considering the current situation. The Federal Reserve needs to raise the interest rate to control inflation, but raising the rate carries risks for the banks, and these two ways have made the possibility of a 0.25% increase very likely because high inflation will not allow the rate not to be raised. On the other hand, the banking crisis does not allow an increase of 0.5%.
If the Federal Reserve increases the interest rate by 0.25%, the dollar will probably strengthen a little, but this scenario can be volatile, that is, the dollar will recover its initial growth, so this scenario does not have much trading value.

But the third scenario is that the Federal Reserve does not change the interest rate and remains constant at 4.75. If the banking crisis is so serious from the Federal Reserve's perspective that it decides not to raise interest rates, the market will be surprised and the US dollar will be extremely weak because market participants will realize that the US banking crisis is serious.

Federal Reserve policy statement

Simultaneously with the interest rate determination at 06 pm, a statement will be published by the Federal Reserve to determine the future monetary policy of this bank. In the statement, if points such as the final rate that the Federal Reserve is considering and when the interest rate increase will stop, are mentioned, it will be of great interest.

Federal Reserve Chairman Mr. Powell's speech

Mr. Powell will give a speech at 06:30 pm to explain more about the Federal Reserve's policies, and after the speech, a Q&A session will be held by journalists.

If Mr. Powell points out in his speech that inflation is still very high, the US labor market is very strong, we will do whatever is necessary to contain inflation, etc. Because it represents the contractionary and aggressive policy, the US dollar may respond to these points with an upward reaction.

However, if Mr. Powell talks about the banking crisis and says we are taking the necessary measures to prop up the banks or that inflation is coming down, the US dollar may respond to those points with a downward reaction.

As mentioned, after Mr. Powell's speech, reporters will ask questions. If these questions notify market participants of the Federal Reserve's decisions, this can determine the direction of the US dollar in related symbols.

How to trade at the time of interest rate determination

At the time of important news releases such as interest rates, trading is associated with a very high risk and causes many traders to lose. The Trendo Team recommends that traders control their sentiments at this time and strictly observe capital management.

But generally, if the interest rate increases by 0.5% before Mr. Powell's speech, the dollar can strengthen in related symbols.

If the interest rate doesn't change the dollar will weaken before Mr. Powell's speech.

The dollar will fluctuate for a 0.25% increase, which will probably tend to rise more. But since this scenario doesn't have a clear path, one cannot make a good deal based on it.

But at the time of Mr. Powell's speech, trading has a very high risk, because, at any moment, traders may pick up different results from Mr. Powell's speech. The best option at this time is to wait until the lecture and Q&A session are over, and then make the desired trade with your trading strategy and capital management in a suitable trading position.

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