Skip to content

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

FOMC meeting preview: Fed set to raise rates amidst inflation concerns

Find out what to expect from the upcoming FOMC meeting as the Fed weighs inflation concerns and their impact on monetary policy.

Source: Bloomberg

At its last meeting in June, the FOMC kept its Fed Funds rate on hold at 5-5.25% - its highest level since September 2007 to assess incoming data and the impact of its rate-hiking cycle.

“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy.”

The minutes from the meeting noted that with inflation still well above the Fed's 2% inflation goal, maintaining a restrictive stance for monetary policy would be appropriate, and that further tightening would be needed to achieve this goal.

“Almost all participants noted that in their economic projections, they judged that additional increases in the target federal funds rate during 2023 would be appropriate.”

Federal funds effective rate

Source: Board of Governors of the Federal Reserve System (US)

What is expected?

The Fed is widely expected to lift rates by 25bp to 5.25%-5.50%. Which means the real focus will be on forward guidance. The post-meeting statement will likely retain a tightening bias “additional policy firming that may be appropriate”.

In the press conference, Fed Chair Powell will likely reiterate a data-dependent approach and note that the June dots forecast higher rates ahead. Given the recent run of robust activity data, this point might receive more hawkish emphasis. Currently, the rates market assigns only a 35% probability of a second 25bp rate hike before year-end.

USD technical analysis

During the first half of 2023, the US dollar index tested and held support at 101.00/80 on three separate occasions before punching lower post this month's softer-than-expected CPI data.

The swift recovery back above 101.00/80 leaves the post-CPI sell-off to the 99.57 low, exposed as a false break lower. For followers of Elliott Wave, this is viewed as Wave V low, following the completion of a five-wave sequence from the 114.78 September high, as viewed on the chart below.

Should the DXY see a sustained close (two days minimum) back above resistance at 102.00/40, post tomorrow morning's FOMC meeting, it would confirm the wave count on the chart below and signal that a stronger recovery is underway initially to trend line resistance and the 200-day moving average at 104.00.

Aware that should the FOMC sound more dovish than expected, and the DXY index closes back below support at 101.00/80, it would signal that a retest and break of the recent 99.57 low is underway with scope to 97.00, as part of a Wave V extension to the downside.

USD daily chart

Source: TradingView

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Live prices on most popular markets

  • Equities
  • Indices
  • Forex
  • Commodities


Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.