Majors Wait for the FED
Major currency pairs often pause ahead of FED decisions. Uncertainty creates consolidation. Traders wait for clues on rates or policy. This builds tension. Volatility follows the release. Volume price analysis (VPA) helps navigate the wait.
Ahead of today’s release of the FOMC minutes it has been the commodity dollars that have reacted most strongly to a stronger USD, whilst eurodollar and cable have been contained to a very narrow trading range. It will be interesting to see whether these two laggards will play catch-up once the minutes hit the news wires.
USD/JPY too has been contained, with the pair cautiously approaching the 124 price point, but finding the 123.60 price level so far difficult to breach. For USD/JPY, it will be a reaction in equities that determines whether we see further upward momentum in this pair, as the market waits for clues on the FED’s interest rate intentions.
Why Majors Consolidate Pre-FED
FED announcements drive USD strength. Hawkish tone (hikes) boosts dollar. Dovish (cuts or pause) weakens it. Majors like EUR/USD or GBP/USD range tightly. Low volume shows indecision. Quantum currency strength indicator ranks USD high in anticipation.
VPA Insights During the Wait
Volume price analysis (VPA) reveals subtle shifts. Low volume ranges signal caution. Spikes on news previews warn of traps. High volume at extremes hints at positioning. Quantum Trend Monitor on MT5 or NinjaTrader stays neutral in chop.
Trading the Pre-FED Pause
Avoid forcing trades in low volatility. Watch for volume confirmation post-release. Breakouts on high volume validate direction. Pullbacks offer entries. Anna Coulling’s VPA approach with Quantum tools turns waiting into a disciplined opportunity.
Majors wait for the FED creates setups. Quantum indicators spot sentiment early. Stay patient—volume reveals the real move.
Understanding the Federal Reserve: Mandate, Announcements, and the Post-Decision Press Conference
The Federal Reserve (Fed) is the central bank of the United States. It plays a crucial role in global markets. Forex, stocks, bonds, and commodities all react to its decisions. Volume price analysis (VPA) helps traders navigate the volatility these announcements create.
The Fed’s Dual Mandate
The Fed has a dual mandate from Congress:
- Maximum employment: Aim for low unemployment (around 4-5%).
- Price stability: Target 2% inflation (measured by PCE index).
It uses interest rates and balance sheet tools to achieve this. Rate hikes cool inflation but slow growth. Cuts stimulate but risk overheating.
What the Fed Announces and When
The Federal Open Market Committee (FOMC) makes policy decisions. It meets 8 times a year (roughly every 6 weeks—check federalreserve.gov for exact dates).
Key announcements at 2:00 PM ET:
- Interest Rate Decision: Fed funds rate change (or hold).
- Economic Projections (Quarterly, “dot plot”): Members’ forecasts for rates, GDP, unemployment, inflation.
- Policy Statement: Explains reasoning.
The Importance of the Post-Decision Press Conference
The FOMC chair (currently Jerome Powell) holds a press conference 30 minutes after the announcement (4 times a year, when projections release).
Why it’s critical:
- Forward Guidance: Chair explains thinking, hints at future moves.
- Market Reaction: Often bigger volatility than the statement—questions probe nuances.
- Sentiment Driver: Dovish tone weakens USD. Hawkish strengthens it.
VPA confirms reactions—high volume post-conference validates direction.
Trading the Fed with VPA
Fed events create volatility. Prepare with a calendar. Wait for volume confirmation on moves. Quantum currency strength indicator ranks USD post-news. VPA spots conviction—high volume aligns with sentiment.
The Fed’s mandate and announcements move markets. The press conference adds depth. Use VPA and Quantum tools to support disciplined decision-making.
By Anna Coulling
Creator of Volume Price Analysis