The minutes published yesterday from the last Federal Reserve meeting were not only “outdated”, as some consulting agencies called them in light of the fact that trade negotiations between the US and China were resumed, but also neutral in content – some FOMC members even voted against lower rates. As a result, the market probability of a rate cut in September fell from 99.2% to 98.5%, while the likelihood of a rate cut in October to 1.75% fell from 80.6% to 67.8%, and to 2.00% has increased from 19.2% to 31.1%. That is, investors have measured the aggressiveness of expectations of a “super softening.” Indeed, many simply forgot that the Fed ceases to unload its own balance, getting rid of mortgage securities, and such a measure, as historically believed, is equivalent to lowering the rate by the same 0.25%. As a result, the euro returned to Monday’s range, investors with even greater calmness await the news from Jackson Hole. The event opens today, Jerome Powell is set to speak tomorrow. Trading volumes were below average yesterday.
The Marlin oscillator has not yet “cooled down” on the daily chart and there is a slight increase in the signal line.
On the four-hour chart, yesterday’s growth came to a stop on the balance indicator line. As in previous days, the price remains in the expectated range of 1.1066-1.1120. We are looking forward to breaking the range down today or tomorrow with the prospect of a decline to 1.0980 – the Fibonacci reaction level of 138.2% (daily).