Federal Reserve and 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 December 10 decision may sharply change the market landscape and open new trading opportunities. The market has almost fully priced in a third rate cut this year, yet the trajectory of monetary policy for 2026 remains extremely uncertain.

The Fed lacks key data — official October employment figures (NFP) and the latest CPI reading. This severely complicates decision-making, given the deep internal divisions within the FOMC.

Key elements of the current situation:

• After the shutdown, labor-market data became contradictory: ADP shows job losses, while initial claims are falling below 200K. Relying on such statistics means working blind.
• Powell has effectively become a “lame duck”: his term expires in May 2026, and historically the market often corrects ahead of a Fed leadership change.
• The likely next Fed Chair — Kevin Hassett — intends to accelerate the rate-cut cycle starting June 2026. Powell’s current steps are seen as sufficient, and his comments on policy outlook are increasingly perceived as subjective.
• The current Fed composition — despite criticism from the White House — is effectively prepared to use QE-like tools to stabilize liquidity.
• U.S. inflationary pressure is being driven less by monetary policy and more by the Trump administration’s trade strategy. Lowering inflation is a key Republican goal before the 2026 elections. Concluding trade agreements, especially with Canada, plays a major role.

There is a high probability that the upcoming Fed meeting will become a “cold shower” for markets — similar surprises have occurred many times before. This creates conditions for a healthy correction in equities and for building a new, more sustainable upward trend.

Simultaneously with the rate decision, the FOMC will publish an updated economic outlook. Possible market reactions:

If the forecast is soft (optimistic):

• equities gain support;
• the dollar comes under pressure;
• gold and silver extend gains;
• bitcoin may show a short-term upward impulse.

If the tone is hawkish (negative):

• equities move into correction;
• the dollar strengthens;
• metals and cryptoassets come under pressure.

High volatility is expected in the first hours after the meeting: FX pairs, XAUUSD, XAGUSD and indices such as the USD Index, SP500, RUS2000 and NAS100 may move 1.5% or more. Caution is essential — the reaction may be sharp and impulsive. Sustained trends will begin forming roughly 24 hours after the release of the decision and economic forecast.

So we act wisely and avoid unnecessary risks.

Profits to y’all!