Traders Expect Fed to Raise Rates for First Time in 3 Years

The news reflects the expectation that the Fed will raise interest rates for the first time in three years; this is a positive catalyst for the US dollar. DXY last closed at 99.71, above its 20- and 50-day moving averages, with RSI at 58, not in overbought territory, and MACD slightly above the signal line. The technical picture supports a short-term upward bias, but it should be remembered that the rate hike expectation may be largely priced in. Nevertheless, the alignment of news flow and technical indicators increases the likelihood of limited upward movement in the 1-3 day horizon. Caution is warranted; if the expectation is not realized, a sharp correction could ensue.

The expectation of the Fed's first rate hike in 3 years is a negative signal for risk assets. SPX has fallen 0.71% in the last 24 hours to 7608, very close to its SMA20 but below its SMA50. RSI at 47 is in neutral territory, not oversold; MACD is negative and below the signal line, momentum is weak. The rate hike expectation could increase selling pressure in the short term, but the proximity of the price to SMA20 and the neutral RSI limit the possibility of a sharp decline. Nevertheless, the news flow and technical indicators point to downside risk.

The expectation of the Fed's first rate hike in three years could create downward pressure on the NDX in the short term. The RSI at 48.7 is in neutral territory and below the MACD signal line, confirming weak momentum. The price is slightly above the SMA20 but below the SMA50, indicating that medium-term resistance persists despite a short-term recovery. The rate hike expectation could create valuation pressure on growth stocks and negatively affect the tech-heavy index. However, as the expectation is largely priced in and depending on data flow, the reaction may be limited.

The Fed's rate hike expectation is a negative factor for gold prices, as a rate increase raises the opportunity cost of holding gold and could strengthen the dollar. However, the latest close at 4344.255 showed a 1.42% increase in 24 hours, and the RSI is at 55, in neutral territory with no overbought signal. The MACD is in negative territory and below the signal line, indicating weak short-term momentum. The news may not yet be priced in, so I expect a bearish but limited impact. Nevertheless, if market expectations are strong, selling pressure could increase.