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USD Rebounds as the Fed Announcement Nears
26.07.2022

The US Dollar is significantly increasing in value against all major competitors including the Euro, the Pound and the Japanese Yen 🤔. The price movement in favor of the Dollar comes after the currency had been seeing little gains for 10 days. The currency is increasing in value as traders are readying their trades for tomorrow’s Federal Fund Rate 👀

Plenty of movement during today’s market too as traders get to grips with higher interest rates, economic releases and the continuation of earning reports 👂👀

The US Dollar

💵 The price of the US Dollar had been losing value against most currencies over the past 10 days. The currency had been decreasing for 3 consecutive weeks 📈. It is understandable that the currency is likely to fall into a retracement after such a strong and lengthy trend, however, we can see on the chart that the price is again gaining momentum over the past 4 hours.

Will this develop into the continuation of the bearish trend? This depends on whether the price is able to break out of the current price range which will allow for a sell signal. Whether the sell signal will continue to develop further will also depend on this afternoon's Consumer Confidence 👂 due to be released. Let’s also not forget tomorrow’s interest rate hike. The higher the hike the more positive for the currency.

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The US Stock Market

The US Stock market has slightly declined in value over the past 2 trading days but remains high without seeing significant declines 📉. The price is, however, likely to experience higher levels of volatility as the market turns its attention again to the interest rate hikes as well as the quarterly earning reports due to be released over the coming days.

The US Stock market has remained under pressure for months. Since the Federal Reserve has been increasing interest rates more and more, investors have feared that the economy would fall into a recession or at least some kind of economic stagnation.

The Federal Reserve is predicted to raise interest rates by 75 basis points tomorrow afternoon, its second hike in a row of that size. However, the market has also left the door open for a potential rate hike of 1% which might add further pressure on the stock market 👀. As for the central bank’s meeting in September, investors will be looking for guidance from Fed Chairman Jerome Powell but he is likely to be vague and leave options open as he did in the previous meeting.

Today, several major companies in the US stock market will announce their earnings reports for the second quarter of the year - an event which is known to trigger strong price movements 👂. This includes companies such as Microsoft which is predicted to confirm revenue of $52.43B - slightly higher than the $49.36B shown the previous quarter. Alphabet, which owns the Google and YouTube brands, is expected to report a figure of $70.04B against $68.01B from last quarter. Lastly, Visa will confirm their quarterly revenue which, according to reports, will be in the region of $7.06B. This is in line with the $7.19B shown in the previous period.

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Commodities - Oil

The price of Oil 🛢️ finds itself in a sideways trend this morning. It began the trading session by moving in favor of the uptrend that was originally established yesterday, but moved into a sideways trend after renewing highs. The price movement has managed to cross the previous resistance level in the latest bearish wave. Traders are awaiting for further momentum to build in order to potentially position further trades.

The price of Oil is likely to continue to be influenced by the current supply issues, Crude Oil Inventories and yet again, the big news for the week, tomorrow’s Fed announcement 🏛️

What is the current issue with Supply? 💭

Each country has its stockpile of oil and one of the issues is that this safety net is at historic lows. For example, the Strategic Petroleum Reserve in the US has been reported to be at the lowest level since 1985 when the population was 100 Million less. The lower level of supply does have the potential to cause price increases, however, this is only likely if the economic demand remains high.

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