Recently, Jerome H. Powell, the Federal Reserve chair, made statements indicating that the central bank is adopting a patient stance when it comes to deciding on interest rate cuts. This cautious approach is grounded in the current economic landscape, which includes easing inflation rates and stable growth. Powell also emphasized the Fed’s independence from political pressures, a crucial factor as the upcoming election season approaches.
The Fed had previously raised interest rates to combat rapid inflation, bringing them to 5.3 percent. However, with inflationary pressures subsiding, the possibility of rate cuts is being considered. Despite this, the timing of such cuts remains uncertain. Officials are waiting for further evidence of sustained inflation moderation before making any decisions, which may see action being delayed until June or July.
Analyzing the market, particularly the AUDUSD and EURUSD pairs on the H4 timeframe, shows a bearish sentiment prevailing. In the case of AUDUSD, a bearish outlook is supported by the movement towards a supply zone after a liquidity sweep and a bearish configuration of moving averages. Similarly, EURUSD is anticipated to return to a supply zone after breaking below a previous low, with the 100 and 200 period moving averages acting as resistance levels.
On the GBPUSD front, the situation mirrors that of EURUSD, with a break of structure followed by a retest of the supply zone. The convergence of bearish moving averages, Fibonacci retracement levels, trendline resistance, and rally-base-drop supply zone all point towards a bearish outcome in the near future.
It is essential to remember that trading CFDs carries inherent risks. To navigate these risks successfully, traders must conduct thorough research, stay informed about market developments, and employ risk management strategies. Avoiding costly mistakes and maximizing opportunities requires diligence and a cautious approach.
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