⏬US100 down 1% during Fed press conference

Fed sees risks in the labor market but says there is no need to rush with cuts ⚔️

Right after the decision, we saw a clear weakening of the dollar in response to the Fed move, which was in line with expectations, but there was uncertainty about what projections the Fed would present. It is worth noting that this is the first cut this year. Last year, the Fed cut rates three times, by a total of 100 basis points. Nevertheless, the dollar’s weakness and the initial gains on Wall Street did not last long.

The median rate projection for this year points to two potential cuts. As many as 9 members see cuts of 50bp this year. Miran (most likely) sees much larger cuts, below 3% this year. Also noteworthy, the Fed raised growth forecasts for this year and the coming years, while lowering unemployment forecasts for the future. This indicates that it does not see recession risks. At the same time, the inflation forecast remains unchanged compared to June, when the impact of tariffs was uncertain. This means the Fed does not view tariffs as a clear risk. For next year, inflation forecasts were slightly raised.

The key, however, were Powell’s words during the press conference. He admitted that the labor market has weakened, but said the decisions to delay cuts were appropriate. The crucial statement that led to declines in the US100 and EURUSD was that the Fed does not need to rush with cuts.

US100 is testing 24,000 points. If it closes around these levels, we may be looking at an evening star formation. Source: xStation5

EURUSD is losing intraday. Source: xStation5