The US stock futures are trading higher ahead of the most important event of this week--the Federal Reserve meeting. Jerome Powell, the Federal Reserve Chairman, has said several times that he is in no rush to increase the interest rate or change the stance on the monetary policy. The last time the Federal Reserve had their meeting was back in December, and at the time the situation was completely different.
The US was facing a new wave of coronavirus, and restrictive measures were being rolled out in order to prevent the country from further damage from coronavirus. However since then, the US economic conditions have improved. We have also seen another stimulus package passing from the House and the Senate. This stimulus relief package is going to hit the US economy very soon. Nearly 100,000,000 stimulus checks will be arriving in the next 10 days, and they are very much likely to boost economic growth.
In addition to this we are also looking at a situation where more than 20% of the population have already received their first jab of COVID-19 vaccine. The restrictive coronavirus measures which were put in place back in December are also being eased off.
Basically we are looking at the situation where there are greater chances of a market tantrum taking place because the Fed is under pressure to change the narrative on its monetary policy. Traders are going to focus on the dot plot which with provide us more detail about the Fed’s future monetary policy.
Overall, we are expecting the dollar index to continue its journey to the upside, and this could be immensely bearish for the currency pairs such as the euro dollar. The currency pair is already under selling pressure, and today and tomorrow we could see more sell off for this pair. The immediate support is at 1.17 while the resistance is at 1.2066.
