Global macro overview for 24/05/2018

Yesterday, FOMC Meeting Minutes confirmed the willingness of further gradual interest rate hikes by the Fed. The market is convinced that another 25 bp cost increase will take place in June. Thus, the process of monetary policy normalization would be continued. In the last statement, the Fed pointed to the symmetry of the inflation target. Yesterday's minutes revealed that the majority of FOMC members are ready to tolerate higher price dynamics for some time, which, given the slight wage pressure, may be an argument for three rather than four interest rate hikes this year. Attention was also paid to the need to change the language of the message and remove the phrase referring to the expansive attitude in monetary policy. Some Fed members believe that monitoring the shape of the yield curve of US bonds remains an important issue. The reverse yield curve can be an indicator that can signal the risk of occurrence.

In conclusion, the Fed is about to hike the interest rates in June. The question remains whether the Fed will hike again in September and in December or just in December? Nevertheless, the US Dollar should continue its appreciation across the board.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The bulls have managed to make another local high at the level of 94.19 in overbought market conditions and despite the growing bearish divergence. The price is still trading inside of the channel and as long as the support zone between the levels of 93.21 - 93.11 is not cleary violated, the dominant bias is bullish.


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