Market Retreat Ahead of Fed Meeting
After a series of positive sessions, risk markets experienced a notable downturn on Tuesday, just a day before the highly anticipated results of this week’s U.S. Federal Reserve policy meeting. At the time of writing, Bitcoin was trading at $81,300, reflecting a 3.5% decline over the past 24 hours. Other cryptocurrencies, including Solana (SOL), Ether (ETH), and XRP, also recorded modest losses, contributing to the overall market sentiment.
As trading approached its close, major indices were feeling the pressure, with the Nasdaq index down by 1.7% and the S&P 500 falling 1.1%. The Federal Open Market Committee (FOMC) commenced its two-day policy meeting today, with results and Chairman Jerome Powell’s post-meeting press conference scheduled for Wednesday afternoon in U.S. hours.
While market analysts do not foresee any immediate changes to interest rates, traders are keenly watching for indications that the Fed may adopt a more dovish stance in response to the recent market volatility and the slowdown in inflation rates. However, the trading activity observed on Tuesday suggests a prevailing nervousness, indicating that the Fed may not be ready to ease its policy just yet. It’s worth noting that the dip in inflation seen in February was relatively minor and based on a single report. Furthermore, the recent downturn in the markets—though distressing for many investors—has been somewhat moderate, especially when compared to the remarkable upward trajectory witnessed in recent years.
According to the CME FedWatch Tool, today’s rate traders do not anticipate any rate cuts during tomorrow’s meeting, with only a 20% likelihood of the central bank easing rates at its next meeting in May. However, the outlook shifts for June, where there is a 66% probability that the Fed will implement a rate cut.
