There is a possibility of a 7% correction and a 50% retracement from previous highs as the Federal Reserve contemplates a further 0.5% increase over the next two meetings, following the release of robust PCE numbers.
The Federal Reserve is persistently applying pressure to control inflation and deems the current timing suitable, particularly with technology stocks driven by advancements in artificial intelligence propelling the stock markets higher. This, in turn, fosters a fear of missing out (FOMO) mentality, leading individuals to take greater risks and increase their margin exposure.
Federal Reserve speakers have explicitly stated their intention to continue raising rates, citing the sustained growth in PCE and the potential positive job growth data expected at the end of the week, which could signal a robust economy and widespread employment opportunities. These factors give the Federal Reserve the green light to proceed with further rate hikes.
Consequently, this scenario could result in a breakdown of the EURO, characterized by either a standard 7% correction or a 50% retracement based on Fibonacci levels. Additionally, it may indicate the formation of a double top pattern for the US dollar.
To confirm this outlook, several resistance levels need to be surpassed. These levels could be breached in the coming weeks, either just before or after the Federal Reserve meeting. The meeting notes and the language used by the Federal Reserve officials will be crucial in determining any potential recovery. However, at present, it appears that a standard 7% correction is likely to occur.
The Federal Reserve is persistently applying pressure to control inflation and deems the current timing suitable, particularly with technology stocks driven by advancements in artificial intelligence propelling the stock markets higher. This, in turn, fosters a fear of missing out (FOMO) mentality, leading individuals to take greater risks and increase their margin exposure.
Federal Reserve speakers have explicitly stated their intention to continue raising rates, citing the sustained growth in PCE and the potential positive job growth data expected at the end of the week, which could signal a robust economy and widespread employment opportunities. These factors give the Federal Reserve the green light to proceed with further rate hikes.
Consequently, this scenario could result in a breakdown of the EURO, characterized by either a standard 7% correction or a 50% retracement based on Fibonacci levels. Additionally, it may indicate the formation of a double top pattern for the US dollar.
To confirm this outlook, several resistance levels need to be surpassed. These levels could be breached in the coming weeks, either just before or after the Federal Reserve meeting. The meeting notes and the language used by the Federal Reserve officials will be crucial in determining any potential recovery. However, at present, it appears that a standard 7% correction is likely to occur.
It is worth noting that the CME Fed watch tool, which gauges market expectations, now predicts a 70% chance of no change to interest rates. This represents a significant shift, considering that it was less than 35% the day before.