TD Securities analysts predict the Federal Open Market Committee (FOMC) will maintain interest rates without major shifts. They believe Chair Powell will avoid committing to immediate rate cuts, though the median official still anticipates easing within the year.<\/p>\n
Recent data supports a cautious FOMC approach, making it harder to justify cuts. Analysts think the FOMC meeting will not greatly affect the USD and suggest selling into any USD rallies.<\/p>\n
Chair Powell stays noncommittal regarding the timing of future cuts, acknowledging a bias towards easing this year. He remains reliant on data, noting that risks are currently balanced.<\/p>\n
We expect the Federal Reserve to keep interest rates on hold this week, as a cautious approach seems most likely. Recent data gives the committee a higher burden to justify any immediate cuts. With the December 2025 jobs report showing a solid but moderating gain of 160,000 jobs, there is no urgency to act.<\/p>\n
The upcoming FOMC meeting is unlikely to be a big driver for the U.S. dollar, as the Chairman will probably remain non-committal and data-dependent. This steady outlook suggests that implied volatility on major currency pairs will likely remain compressed in the short term. Therefore, selling short-dated options strangles on pairs like EUR\/USD could be a viable strategy to collect premium.<\/p>\n
Our underlying bias remains to sell into any significant U.S. dollar rallies. We remember how the market priced in aggressive cuts throughout 2025 only to be disappointed. For traders, this means using any strength in the dollar as an opportunity to initiate bearish positions, such as buying puts on the USD index or establishing put spreads.<\/p>\n
While the Chairman is unlikely to signal the timing of future cuts, the committee is still biased towards easing later this year. The latest CPI data for December 2025 showed headline inflation cooling to 3.2% year-over-year, which supports this eventual path. Traders should look at interest rate futures for the second half of 2026 to position for this eventual policy shift.<\/p>\n
The current environment suggests a balanced risk profile from the Fed\u2019s perspective. This supports a view that near-term price action will be contained within established ranges. As a result, range-trading strategies using iron condors on currency ETFs might be appropriate for the next few weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" FOMC likely holds rates steady; Powell stays cautious on cuts, with easing expected later this year.<\/p>\n","protected":false},"author":62,"featured_media":17027,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40304","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=40304"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40304\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17027"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=40304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=40304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=40304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}