The market is in a range with price action lacking a firm direction and clearly waiting for a fundamental factor to drive it in either direction. The FOMC meeting tomorrow will be such a driver and we have two outcomes below along with our rationale.
Outcome 1 - Rate Hike and Press Conference - 65% Likelihood: We favour a statement and press conference from the FED given Donald Trump has signalled pro business policy and major infrastructure spending. We believe that this will put pressure on the FED to act now and raise rates to accommodate expected economic growth over Trumps first 100 days in office where his policies will be announced and actioned.
Outcome 2 - No Hike and Dovish Press Conference - 35% Likelihood: Looking at the chart the market is waiting for direction. In the face of Trumps growth ambitions the market is still undecided on the direction of the FOMC. We then keep our options open on a surge in the Euro as this outcome would mean the FED don't follow the President-Elects view of increased economic growth through infrastructure spending and pro business policies.
How to trade: We suggest orders placed on the fringes of the blue box in either direction with small risk stop losses, it's likely price will surge in either direction on the rate decision and statement.
Price will then fluctuate during the press conference however it is likely the comments in the conference will be supportive of whichever direction price moves after the rate decision.