Fed & Powell: Monetary Blackmail

EUR/USD

Key zone: 1.1600 - 1.1680

Buy: 1.1700 (on strong positive fundamentals) ; target 1.1850; StopLoss 1.1630

Sell: 1.1600 (on a confident breakout of the 1.1650 level) ; target 1.1450; StopLoss 1.1670

Despite the acute liquidity shortage, the Federal Reserve’s decision on December 10 may sharply shift market sentiment and open new trading opportunities. The market expects a third rate cut this year, but the trajectory for next year remains unclear.

At the moment, the Fed has no official data for October employment (NFP) or the latest inflation report (CPI). This complicates decision-making amid deep disagreements inside the FOMC.

Key factors worth noting:

• After the shutdown, labor-market reports are extremely contradictory: last week ADP was negative, but initial jobless claims fell below 200K. Using such data destroys the effectiveness of any decision.
• Powell is already a lame duck — he will leave office in May 2026. It would be “logical” for markets to collapse before his exit.
• The most likely future Fed Chair, Kevin Hassett, intends to accelerate rate cuts starting June, so Powell’s cuts now are more than enough. Powell’s rhetoric about future monetary policy can be viewed as personal fantasies.
• Even the current Fed Board — which Trump considers unprofessional — is prepared to launch a QE-like mechanism to support market liquidity.
• Inflation today is driven not by the Fed, but by Trump’s policy. Republicans need lower inflation ahead of the November 2026 midterms. New trade agreements support this goal — the Canada deal is especially important. Positive news is expected soon.

A scenario in which the upcoming Fed meeting becomes a “cold shower” for markets remains completely realistic — this has happened many times in the past. Indexes could get a chance for a solid correction, from which a fresh bullish market could emerge.

Along with the rate decision, the FOMC will publish updated economic projections. How might markets react?

If the forecast is dovish (optimistic):

• the stock market receives support;
• the dollar comes under pressure;
• gold and silver gain bullish momentum;
• bitcoin gets a short-term upward impulse.

If the rhetoric is hawkish (negative):

• stocks fall;
• the dollar strengthens;
• metals and cryptocurrencies come under pressure.

High volatility is expected in the first hours after the decision — major currency pairs, XAUUSD, XAGUSD, and indices (USD Index, SP500, RUS2000, NAS100) may move 1.5% or more. Be cautious — the reaction may be sharp.

New trend formation will begin approximately 24 hours later.

So we act wisely and avoid unnecessary risks.

Profits to y’all!