The FOMC is stuck & Powell remains at the Board of Governors – North American Mid-Week Market Update

• Mid-Week review where we dive into the major developments for North American and global Markets
• After a very confusing week, Traders looking for certainty could not find what they wanted with the FOMC Rate Decision
• Geopolitics remain cloudy and risk assets are not able to withstand the fundamentals, pushing Oil to $110 and higher for longer rates

Log in to our mid-week North American Markets overview, where we examine current themes in North America and provide an overview of index and currency performance.

After an incredibly confusing start to the week, traders desperately searching for a lifeline of macroeconomic certainty found absolutely no comfort in today's highly anticipated FOMC policy decision.

Taking a step back, Stock Investors (particularly in tech) aren't seemingly so concerned about these themes, but some fundamentals are still confusing and could be a factor in the return of broader Market anxiety.

The Federal Reserve officially held its benchmark overnight rate steady in the 3.50%–3.75% range.

In what marks Jerome Powell’s final FOMC press conference, the outgoing Chair is currently at the podium and announced that he would stay at the Board of Governors for the time that Kevin Warsh gets comfortable with his new role.

The committee offered zero forward guidance regarding the timing of future moves, explicitly citing the heightened, compounding uncertainty stemming from the ongoing Middle East developments.

While Powell noted that job gains remain low on average, the broader unemployment rate is little changed, creating a highly resilient economic backdrop, with Employment demand also easing throughout the last year.

The Chair is hinting at the increasingly conflicting mandates of sticky inflation and a tight labor market, but one thing is crystal clear for traders searching for clues: rate cuts are absolutely not on the agenda as long as the Economy grows. And Powell made quite a few mentions on that page.

With the current Fed Chair exiting the stage, market doves looking for an easing lifeline will now be forced to lean entirely on Kevin Warsh's future promises and expected political bias to price in any type of dovish movement.

The broader macroeconomic picture is still warped by an intensely cloudy geopolitical landscape. Risk assets are quite resilient, withstanding these toxic fundamentals reflected by WTI Crude Oil pushing back up to the $110 handle.

The logistical nightmare in the Middle East is showing zero signs of easing.

The US naval blockade on the Strait of Hormuz continues, and President Trump just doubled down on his maximum pressure campaign, stating firmly today that he "will not lift the naval blockade without a deal on the nuclear program."

So essentially, the blockade should hold until Iran economically chokes out from their Oil gluts and are forced to come back to the negotiation table.

Despite these glaring fundamental and geopolitical roadblocks, US stock markets miraculously remain at historic highs.

Investors are operating in an ever-more ecstatic state of expectation, relying on the tech sector to mask the underlying macroeconomic panic.

However, with valuations stretched to the absolute limit and the peace trade stalled near all-time highs, Wall Street is walking on thin ice.

Any negative surprise from this point forward could trigger a brutal, market-wide hangover – At least, the FOMC did not bring the negative catalyst that it could have triggered.

Let's dive right into our Mid-Week North American Markets recap.

Read More:

• April FOMC US Index Levels for Dow Jones, Nasdaq and S&P 500
• Bank of Canada neutral hold (2.25%) – USD/CAD rallies to 1.37 – Press Conference coming up
• Chart alert: Silver (XAG/USD) rout extends below $75.90 key intraday resistance, bearish trend intact

Only Nasdaq is withstanding the rallies in Crude Oil while European, Canadian and Japanese Markets are having a tough time – They remain close to their all-time highs, so that gives space for movement in the event of a turn lower

The US Dollar is still effectively stuck within its 98.00 to 99.30 Range with the fundamental and geopolitical foundations not changing.

Expect this range to hold, particularly if the US-Iran situation doesn't change until then.

Look out for ranges in mean-reverting price action in FX.

Levels to place on your DXY charts:

Resistance Levels

• 99.16 4H 200-period MA
• 99.30 to 99.50 Resistance
• 100.00 to 100.50 Main resistance and Range highs
• War Highs 100.544 (Double Top)

Support Levels

• 98.50 to 98.70 War Pivot and 4H 50-period MA
• 98.00 Major Support
• Support 97.40 to 97.60
• 2025 Lows Major support 96.50 to 97.00

The USD recovered quite well from its previous week's losses, particularly against currencies with lower Central Bank yields including the JPY, NZD and CHF.

The action is still mixed after the FOMC, but the path remains tilted to the upside, as the mean-reversion higher continues.

The CAD continues to rebound against its Major FX peers, sustained by the elevated WTI Crude prices, exploding orders for its Heavy Crude and solid communications from Governor Macklem this morning.

Loonie strength should maintain as long as Crude Oil remains above $70 per barrel.

To learn more, check out our post-Bank of Canada USD/CAD analysis!

The North American calendar continues to provide content for CAD and USD traders, with Canadian and US GDP coming up tomorrow morning.

For the rest, PMI figures will be the main Macro figures for traders to assess the effect of recent wartime economic activity.

Safe Trades!

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