The lack of a press conference on the agenda and the historically low significance of meetings in the last but one month of the year suggested that the Federal Reserve (FED) would not decide on any significant move. Markets, however, are counting on a rate hike in December, which triggered a strengthening of the dollar against the euro and the pound sterling.
"Information received since the meeting of the Federal Open Market Commission in September indicates that the labor market is still strengthening and that economic activity is growing at a rapid pace. Employment growth has been moderately strong in recent months and the unemployment rate has fallen. Household spending continued to grow strongly, while investment growth in fixed assets in enterprises declined rapidly at the beginning of the year. Within 12 months, both general inflation and inflation in the case of items other than food and energy remained at the level of nearly 2%. Indicators of long-term inflation expectations have not changed much," wrote the Fed in an official statement.
With regard to interest rates, the Fed maintains its current rhetoric suggesting that further interest rate hikes will be closely related to the persistent economic growth and economic activity, a strong labor market and maintaining price dynamics around the target level set by the bank. The risk for the economic outlook remains "more or less sustainable".
Let's now take a look at the US Dollar Index technical picture at the H4 time frame after the Fed decision is done. The strengthening of the USD is clear as the market has broken above the golden trend line resistance and is heading towards the technical resistance at the level of 96.87. The strong and positive momentum supports the short-term bullish bias. The nearest support is seen at the level of 96.68.
