The meeting of the US Fed on monetary policy will be held this week, January 27. The regular raise of interest rates is not expected from the Fed at the January meeting, but the market participants are interested in the opinion of the Fed on the current situation at the world market. Everybody will expect what the US regulator says at the press conference.
Recently all Central Banks have evaluated risks with regard to low oil prices and problems in China, so it will be interesting, how Fed considers these issues and what predictions it makes about the further development of events.
Since the beginning of the year the US dollar has not shown the directed motion; a small increase of the index was followed by the corrections and the consolidations in the range of 99 basis points on the chart. The greenback has the potential to get the trend on Wednesday. If the Fed confirms its intention to continue the process of rate increase in the earlier planned cycle in the nearest future, and the fact that the US economy develops within the acceptable norms, we can see the strengthening of American currency against other currencies, and the achievement of the first targeted mark of 100 basis points on the chart. Otherwise, if the US regulator declares that the situation on the world market forces the Fed to be more careful, and the dynamics of interest rates raising may be reduced, the American dollar can backwater partially against other currencies and remain sideways until the next Fed meeting.
Oleksandr Tikhonov, leading analyst of Premium-Signals.com