FOMC Meeting: How Fed Decision Will Impact Markets This Week
The FOMC meeting is among the main drivers this week. The event will take place on Tuesday and Wednesday, with the rate announcement on October 29. The Fed is expected to cut rates by 25 bps, which is fully priced in. Market participants will focus on comments from the Federal Reserve officials. In case of a more dovish tone, the US dollar may become even weaker.
In Europe, the political situation is still unstable, even after the reassignment of Sebastien Lecornu. Moreover, mixed macroeconomic data puts some pressure on the euro and other assets. The ECB will hold a meeting on October 30, and the officials are likely to vote for making no changes in the monetary policy. Moreover, according to Christine Lagarde, the European Central Bank is likely to hold rates until 2026.
The ongoing shutdown continues to put pressure on the US dollar. The federal government has been closed for almost one month already, which is the longest shutdown in the history of the United States. While sides still try to make a deal, the shutdown is likely to continue at the beginning of November, which will put some additional pressure on the USD.
Trade tensions between the US and China have eased after the meeting between representatives of both states. However, the main event will take place soon when the leaders of the US and China will meet in person. As of now, Donald Trump has already canceled 100% tariffs on imports from China that were planned to be imposed starting in November.
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EUR/USD: All Eyes on the FOMC Meeting
The Euro is supported by the latest comments from the ECB president about the rate and expectations. Now, financial market participants anticipate the upcoming FOMC meeting and comments from Fed voting members.
Weaker Eurozone industrial data is still weighing on the market sentiment, but the services sector remains stable, which supports the currency.
From the technical analysis perspective, the currency pair is trading close to the upper band of the Bollinger Bands indicator. The uptrend is confirmed by the slope of the indicator. If EUR/USD moves above 1.1670, then buyers can target 1.1720-1.1730. On the downside, by breaking below the middle line, EUR/USD can move below 1.1630.
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Start NowGBP/USD: The British Currency Balances Between the FOMC Meeting and the UK Data
The currency pair is trading in a large range amid the expectations of the upcoming FOMC meeting results. The Bank of England is likely to maintain rates in the near term, which is supporting the British currency. Additional support comes from the expectations of the Fed decisions on October 29.
From the technical analysis perspective, GBP/USD is trading close to the lower band of the Bollinger Bands indicator. By breaking below 1.3300, the currency pair is likely to target 1.3260-1.3250. The bullish scenario will be possible if the currency pair breaks above 1.3330.
WTI: Oil Prices Are Under Pressure Amid Oversupply Risks
Oil prices are under pressure as the OPEC+ cartel is likely to announce another output increase in December. Moreover, Iraq has already commented on its output surplus and is ready to continue its efforts to produce more oil in the future. Global demand concerns also weigh on crude oil, although the anticipated deal between the US and China may ease tensions and bring some optimism to the commodities market.
On the other hand, oil may be supported by the Fed decisions and comments from the FOMC officials on October 29. If they express more willingness to continue monetary policy normalization, the US dollar will be under pressure, which may support WTI.
From the technical analysis perspective, oil is trading close to the lower band of the Bollinger Bands indicator, which means that bears are controlling the market. Sellers can engage if WTI breaks below 60.20, targeting 59.70 and 59.10. On the upside, a reversal may push oil to 62.30.
Gold: The Precious Metal Is Under Pressure
Gold remains under pressure amid the easing of tensions between the US and China. The possible deal between the two countries supports a positive market mood and pushes traders to buy some risky assets instead of investing in safe-haven gold. However, if FOMC comments will be more dovish, gold may resume its upside.
From the technical analysis perspective, gold is trading close to the lower band of the Bollinger Bands indicator. By breaking below 3,900, XAU/USD will target 3,860. On the upside, by breaking above 3,930, gold may target 3,970-3,980.
