US Dollar, EUR/USD, GBP/USD, USD/CAD Talking Points:
- The US Dollar[1] is holding a three-week-old range near the 2021 highs and tomorrow brings a pivotal FOMC[2] rate decision.
- As looked at previously, a number of major pairs are at significant inflection points on the chart – and for the USD[3] breakout to continue, EUR/USD[4] or GBP/USD[5] are going to need to take out a massive spot of support.
- The analysis contained in article relies on price action[6] and chart formations[7]. To learn more about price action or chart patterns, check out our DailyFX Education[8] section.
The December FOMC rate decision is just around the corner and while this may be the final rate decision for the Fed in 2021, it’s also lining up to be one of the most eventful in years.
The bank has been pushing very loose monetary policy ever since the pandemic came into the equation, but the FOMC was already pretty loose and passive before that. After hiking seven times in 2017 and 2018, the Fed had to backtrack in 2019 to cut rates three times. They held out the hope that they’d soon be able to normalize policy and after those three 2019 rate cuts, stocks simply jumped up to another fresh all-time-high. But, when the pandemic came into the equation the bank needed to act and they did so by triggering a massive onslaught of stimulus.
In Jerome Powell’s own words, there was ‘no limit’ to what the Fed could do[9] with the liquidity programs available to them. And those programs worked wonders as equities continued jumping to fresh all-time-highs, even as recently as
