Fed will have the first monetary policy decision after adopting “average inflation targeting”. No policy change is expected. Instead, first focus will be on the tweak in the accompanying statement. The statement should reflect that it seeks to seeking to achieve inflation that averages 2% over time. That is, as Chair Jerome Powell said before, “following periods when inflation has been running below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time”. Secondly, new economic projections should reveal Fed’s view on the outlook of both the economy and the policy rate.

Some suggested readings on Fed:

Dollar index’s rebound from 91.74 remains unconvincing so far, lacking follow through momentum. the conditions for a rebound are still there, as fall from 102.99 has likely completed with five waves down to 91.74, on bullish convergence condition in daily MACD. Break of 93.66 resistance (with corresponding break of 1.1754 support in EUR/USD), should push DXY through 55 day EMA to 38.2% retracement of 102.99 to 91.74 at 96.03.

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