Global macro overview for 21/09/2017

Global macro overview for 21/09/2017:

The two-day FOMC meeting resulted in an overall agreement to keep the interest rates unchanged at the level of 1.25% as widely expected. The Fed announced that starting next month the regulator will gradually shrink its $4.5 trillion balance sheet, which it built up in response to the financial crisis to support the economy.

Compared to June, the group of opponents of another hike in December did not increase. The median cost of money at the end of next year also did not fall. To be right in the eyes of the FOMC, the number of hikes dropped from three to two, and five decision-makers would have to make a "dovish" change of their attitude. Keeping the median on the current level could be interpreted as a signal that the Fed still strongly believes that the economy is indicating a sharp but transitionary decline in headline price dynamics.

The FOMC said that another federal fund rate hike in December is still on the agenda. However, Chairperson Janet Yellen made it clear in her press conference that many policymakers in the committee are troubled by the decline of measures of core inflation earlier this year. If data over the next three months do not show some evidence of inflation returning toward its target of 2 percent, as the FOMC currently expects, rate hikes are likely to be postponed.

Let's now take a look at the US Dollar Index technical picture on the H4 time frame. The hawkish Fed statements have made the price of US Dollar to rally, but the momentum wasn't strong enough to break out significantly above the technical resistance at the level of 92.67. Nevertheless, the golden trend line has been violated and currently, the market is consolidating the gains around the mentioned level. The next technical resistance is seen at the level of 93.35 - 93.63.

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