Fundamental Overview: The Federal Reserve’s interest rate decision of July 31 is underway with investors debating whether policy makers will cut interest rates by 25 basis points or 50 basis points. Chairman Jerome Powell studiously avoided committing himself and colleagues in either direction in congressional testimony last week. The US dollar has been volatile this month as the main price driver has been about investors attempting to anticipate how many interest rate cuts the Fed this year. Fed Chairman Jerome Powell, in remarks for Congress, on July 10th stated the Federal Reserve is concerned about economic weakness. Published minutes of last month’s meeting also signaled the bank is ready to cut rates.

Since then better than expected economic data (Retail Sales July 16th) and Core CPI (11th July) has undermined the case for sharper cuts and dovish noises have continued with New York Fed President John Williams on Thursday saying that the central bank should act quickly at the first sign of trouble in the economy.

What do the markets expect?

CME Group target possibilities now records a 54% chance of a rate cut of 0.25 basis points later this month. There is a 46.2% chance of a sharper 0.5 basis point cut. However, on July 17th the International Monetary Fund said that the U.S. dollar was overvalued by 6% to 12%, based on near-term economic fundamentals. Hedge fund boss Ray Dalio also sees a case for more interest in gold as central banks get more aggressive with policies to devalue currencies.

Technical Levels for the Most Traded Instruments

Example of calculation based on weekly down trend direction for 1.00 Lot*

* 1.00 lot is equivalent of 100 000 units for currency pairs
** 1.00 lot is equivalent of 100 units for GOLD
*** Calculations for exchange rate used as of 10:41 (GMT +1) 22/07/2019
Fortrade recommends the use of Stop-Loss and Take-Profit, please speak to your Senior Account Manager regarding their use.
**** Please consider closing your position in profit, even if it is lower than suggested one
***** Trailing stop technique can protect the profit – Ask your Senior Account Manager for more details