We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
Oil - US Crude
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Greed has proven to be a hindrance more than assistance for traders. How does greed impact your trading? Find out from @RichardSnowFX here: https://t.co/aT8TZjlFqP https://t.co/C4vrTm69sE
  • Central bank independence has several advantages and disadvantages. Find out what they are in-depth with @MartinSEssex here: https://t.co/wVFXbbTxf1 https://t.co/WkwZK6wtzy
  • The $GBPUSD may be carving out a 4-year bearish candlestick pattern as the $EURGBP downtrend prolongs. GBP/JPY may rise but be wary of #Brexit risks clouding technical analysis. Get your GBP market update from @ddubrovskyFX here: https://t.co/wzV4fygKWe https://t.co/hpDmrh0LLo
  • Get your technical setups for the British Pound ahead of the key #Brexit vote in Parliament this weekend here $GBPUSD $EURGBP $GBPJPY - https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/10/19/GBPUSD-EURGBP-GBPJPY-Technical-Analysis-Amid-Brexit-Deal-Vote.html?CHID=9&QPID=917702 https://t.co/TBdvAY6GN2
  • The Australian Dollar could reverse gains if #Brexit is forced to be delayed. Global growth slowdown woes and other fundamental risks may also undermine $AUDUSD upside progress. Get your $AUD market update from @ddubrovskyFX here: https://t.co/VAs2C3cpQj https://t.co/9mqJ0DSLZZ
  • Here is my trading video for the week ahead: '$EURUSD, #Pound, Volatility - The Biggest Risks and Opportunities Ahead' https://www.dailyfx.com/forex/video/daily_news_report/2019/10/19/EURUSD-Pound-Volatility---The-Biggest-Risks-and-Opportunities-Ahead-.html
  • $GBPUSD is on the verge of pushing above five-year resistance. A break above with follow-through may precede considerable upside movement. Get your GBP/USD market update from @ZabelinDimitri here: https://t.co/0qfh7TRWJn https://t.co/GImIwuGodX
  • The $AUD may resume its downtrend while the #ASX 200 stock index powers higher as dovish monetary policy drives interest rates lower. Get your market update from @IlyaSpivak here: https://t.co/UPlHZrt6c2 https://t.co/EIIf9xackw
  • (Fundamental Forecast) Australian Dollar Could Wilt if Brexit Delayed, Growth Risks Hang $AUDUSD #Brexit - https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2019/10/19/Australian-Dollar-Could-Wilt-if-Brexit-Delayed-Growth-Risks-Hang.html?CHID=9&QPID=917702 https://t.co/2aOYhblN3g
  • The $USD faces selling pressure against the Malaysian Ringgit and Philippine Peso. More losses may be in store in $USDMYR as $USDPHP descends through rising support from 2013. Get your market update from @ddubrovskyFX here: https://t.co/t3kmFpmg1w https://t.co/miBrgxmtkA
Central Bank Weekly: After Fed Meeting, One Cut Priced-In for 2020

Central Bank Weekly: After Fed Meeting, One Cut Priced-In for 2020

2019-03-21 16:30:00
Christopher Vecchio, CFA, Sr. Currency Strategist

Talking Points

- The Fed eliminated the chance of a 25-bps rate hike in 2019, initially knocking the US Dollar lower in the process.

- However, rates markets were already pricing in a 27% chance of a rate cut before the end of the year, and pricing hasn’t become materially more dovish since yesterday.

- Retail traders are shifting into neutral positions across USD-pairs – in EURUSD, GBPUSD, and USDJPY.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

The March Fed meeting produced sizeable reactions across global financial markets – Gold prices and US Treasury rates had notable reactions, as did the US Dollar. With Fed Chair Jerome Powell throwing in the towel on a potential rate hike in 2019 – a dramatic departure from the December 2018 Summary of Economic Projections that revealed one to two hikes were possible this year – an initial visceral by markets was almost guaranteed.

Rates Markets Are Not Getting Significantly More Dovish

Less than 24-hours after the FOMC concluded their March gathering, the US Dollar has essentially reversed all of its losses. One needs to look no further than rates markets for the reason why. Prior to yesterday’s Fed meeting, rates markets were pricing in a 27% chance of a 25-bps rate cut before the end of the year.

Now, the odds of a rate cut by December are at 33%. Despite all the fire and fury around yesterday’s Fed meeting, no can objectively say that pricing has changed all that significantly. The Fed has simply arrived at a place where the market has been for many months now – including prior to the 2018 US midterm elections (see section: How Quickly Do Traders Spot Shifting Fed Narrative?).

Federal Reserve Rate Hike Expectations (March 21, 2019) (Table 1)

Central Bank Weekly: After Fed Meeting, One Cut Priced-In for 2020

But it’s not just Fed funds futures that have budged little since yesterday, perhaps underscoring why the US Dollar hasn’t seen further downside, and in fact, reversed higher. We can measure whether or not a rate cut is being priced-in for 2020 by examining the difference in borrowing costs for commercial banks over a one-year time horizon in the future.

The spread between the Eurodollar June 2019 and 2020 contracts as well as the Eurodollar December 2019 and 2020 contracts has remained below zero for much of this year– and while these spreads have widened out this week around the Fed meeting…

Eurodollar December 2019/2020 Spread: Daily Timeframe (August 2018 to March 2019) (Chart 1)

Central Bank Weekly: After Fed Meeting, One Cut Priced-In for 2020

…the Eurodollar December 2019 and 2020 contract spread is flat today, after falling from about -19-bps priced-in to -26-bps priced-in. While it may be true that the period of “patience” dictated by Fed Chair Powell is still being observed, markets are forward looking, and as such, a full rate cut has been priced-in by the end of 2020. But that’s all; there has been no significant follow through today. In a sense, this confirms the pre-FOMC notion that all of that dovishness was essentially priced-in.

DXY Index Chart: Daily Timeframe (June 2018 to March 2019) (Chart 2)

Central Bank Weekly: After Fed Meeting, One Cut Priced-In for 2020

Prior to the Fed meeting, it was noted that “given the pricing of a potential December cut, potential downside opportunities for the US Dollar may be limited.” After the Fed meeting this week, and given the volatile price action seen in the past 24-hours, it seems appropriate that the near-term forecast for the DXY Index remains neutral. The weekly candle will be of particular importance as price grapples with not only breaking the triangle its consolidated in since November, but also losing the uptrend from the 2018 low.

Read more: GBPUSD Price Limited as BOE Remains Sidelined by Latest Brexit News


Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.