The USD Analysis In clash With The Fed's Monetary Policy

What will happen to the USD pair in the days to come ？....

If youre planning to trade the USD currency pair this week or beyond.

Guess what？... you must not leave this article unread_(“It's short but to the point”)

In this article you'll discover what to watch-out for this week before trading the USD currency pair and how you can use the information derived here to control your risk management.

As with the raving news of inflation expectations arising on the USD currency pair,which claims that this could affect the “green-back” against its other counterparts,If by any means the Federal Reserve should tighten its monetary policy.

However the quarter-4, gross-domestic-product (GDP) result including the consumer-price-growth (CPE) data, for January will greatly capture the attention of many forex participants.

After-all the gross domestic product figure and the consumer price growth data are one of the major factors that determine the cause of inflation.

whereas the increase of inflation will cause the USD pair to go bearish alongside with other major pairs who have strong potential-bullish power.

while this will result in a poor performance for the USD pair after many traders would have sold it out leaving few market participants to buy.

In the mean-time forex market analysis of the USD currency pair has aroused, a question in the mind of many forex traders. With a major worry of where will the price of the Greenback will likely be heading towards.

Will it go bullish or bearish？.. This is a question you need to place close attention to.

However If by any means you're in doubt of what path to follow concerning trading the USD this week.

Below are some other groundbreaking indicators to watch out for, before trading any pair of the green back;

EUR/USD technical outlook

Bears on the EUR/USD havent given up, but it's also true that the long term way towards a steeper decline is quite long. The weekly chart shows that the pair barely bounced from the 50% retracement of its November/January rally, where EUR/USD also has its 20 SMA. In the mentioned time frame, the Momentum indicator seesaws within positive levels, while the RSI indicator keeps easing, approaching its midline. The longer moving averages are maintaining their bullish slopes well below the current level.

In the daily chart, the pair is developing below a firmly bearish 20 SMA but also bouncing from its 100 SMA. Technical indicators recovered from their weekly lows, but lack enough bullish momentum to suggest another leg north, still developing within negative levels.

Bulls may have better chances if the pair recovers above 1.2060, the 38.2% retracement of the mentioned rally. The next relevant resistance is the 1.2100 level, followed by the 1.2170/80 price zone. Below the weekly low, 1.1885, the next Fibonacci support is the main one to watch as if it finally gives up, the decline has room to continue towards the 1.1600 threshold.

The Feds Monetary Policy clash with the USD currency

According to market research the US dollar may continue to gain ground against other currency in the days to come, as a noticeable rise in inflation fuels bets that the Federal Reserve may tighten its monetary policy levers sooner than expected.

And what does that mean？....It simply means if the federal reserve should tighten its monetary policy this will slow down the overheated economic growth . which Causes reduction in inflation

This could be a good news for the buyers who are interested in seeing the USD pair go bullish with other major currency pair.

The Personal Consumption Expenditures (PCE) Data

Again the Federal Reserve preferred means of analysing consumer price growth also state that the Core Personal Consumption Expenditure (PCE) index had climbed 1.5% in December, which is believed to exceed market estimates record of a 1.3% print.

This data and some other related news could be the reason why the Fed's may decide to tighten the monetary policy or losen it if any presentation of increase yield in the Personal - consumption - expenditure should rise or fall.

Whatever you choose keep your eyes glued to any information regarding this.

The ISM Manufacturing Prices Sub-index

And The ISM manufacturing prices sub-index also surged unexpectedly, rising to 82.1 in January and smashing the analysis for a more conservative increase to 77 In February.

However, inflationary pressures may continue to rise in the coming weeks, as Democrats pave way for President Joe Biden to pass the majority of his proposed $1.9 trillion stimulus package with a simple majority.

This will leave you with a question that'll cause you to be wondering about the proposed stimulus package.

Coronavirus Vaccine Result

The Positive vaccination progress and declining coronavirus cases may also hinder further consumer price growth.

Meanwhile The 7-day moving average that's meant to track Covid-19 infections has Decreased by over 130,000 in the last three weeks, while over 33 million Americans have received at least one dose of a coronavirus vaccine.

However, it still seems relatively unlikely that the Fed will look to adjust its monetary policy settings anytime soon, after the central bank reiterated its pledge to continuing increasing “its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial progress has been made toward the Committees maximum employment and price stability goals”

In summary

the inflation data for the month of January, and fourth-quarter GDP figures, will be closely eyed by market participants.

A larger-than-expected rise in consumer price growth, and a surprisingly positive GDP release, could diminish the need for further stimulus and in turn underpin the US Dollar against its major counterparts.

Whereas Trading the USD pair can sometimes be funny. But having the right information at hand could help you scale your trading result to attain a more positive record.

PS: Trading forex and other cfd products is risky. It's best advisable you seek the advice of an expert before investing your hard earned money.