19 Mar, 2024

The FOMC Meeting in Focus: What to Expect from the Week Ahead

The FOMC meeting will be the key fundamental this week
The FOMC meeting will be the key fundamental this week

The week ahead is expected to be among the busiest five days of the month as four major central banks will make decisions on monetary policies together with other important data releases that will be published in this interval. One of the key events to follow this week is the Fed meeting that will take place on Wednesday, March 20. The expectations are fueled by the probability of the beginning of a series of interest rate cuts that may start in summer. 

The easing tendency is evident, but the latest CPI data released last week may postpone the date of the first rate cut this year. Yearly inflation in the United States posted 3.2% against 3.1% in the previous release, which means a smooth acceleration in price growth. Core monthly CPI remained unchanged at 0.4%, while it was expected to slow down to 0.3%.

It is worth mentioning that the Fed still seeks to bring inflation down to around 2% yearly. According to the latest Jerome Powell comments, the governing board of the Fed is not far from being confident that inflation moves sustainably towards 2%. However, the latest CPI and PPI data demonstrate that inflation may be flatlining before reaching the target level of 2%. 

UK CPI Data and BoE Meeting Will Compete for Traders’ Attention

The UK yearly CPI data may overshadow the BoE meeting as the central bank officials are not planning to make any changes in the monetary policy. According to the latest voting results, only two members were dovish. Moreover, experts expect no voting members to choose the cut option during the upcoming meeting. Therefore, the upcoming yearly UK CPI data is considered to be a stronger price driver that may fuel some local and even medium-term trends. 

According to the latest forecasts, the inflation in the UK is likely to slow down to 3.5% against 4.0% in the previous report, which may help the Monetary Policy Committee to set up their minds for the next meeting that will take place in April. Moreover, flash PMIs will follow on Thursday and they may also shed light for traders on the current state of the British economy and hint at future steps by the Bank of England.

EUR/USD Hourly Chart Review

EUR/USD technical review on the hourly chart
EUR/USD technical review on the hourly chart

EUR/USD stays below the descending trendline on the hourly chart and tests 1.0842. The strength of the US dollar is supported by the higher-than-expected inflation rate that was released last week. If the currency pair makes a breakout of this support level, the next one will be at 1.0812. Keep an eye on the descending trendline as well. If EUR/USD manages to break the descending trendline, a bullish scenario will take place with the currency pair to test 1.0866.

GBP/USD Hourly Chart Review

GBP/USD technical review on the hourly chart
GBP/USD technical review on the hourly chart

The British pound traded between two levels on Monday and started to plunge on Tuesday on the eve of the FOMC meeting and the UK CPI data. The currency pair is testing 1.2671 currently. In the case of the breakout, GBP/USD will target 1.2646, while if the price rejects from 1.2671, there is a probability to move higher and target 1.2698.

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