Federal Reserve (The Fed)
The US central bank. Its rate decisions move every dollar pair, gold and global stocks.
The Federal Reserve is the US central bank. Its rate decisions and guidance move the dollar, gold and global risk appetite within seconds.
The Federal Reserve is the central bank of the United States: a Board in Washington, 12 regional banks and the FOMC committee that sets policy. It runs a dual mandate of stable prices and maximum employment, steering through the federal funds rate, bond buying and forward guidance. No institution moves retail trading conditions more.
How It Works
- FOMC sets the federal funds rate eight times a year
- Dot plot shows where members expect future rates
- Press conferences often move more than the decision itself
Trading Tips
Never hold full dollar risk into an FOMC decision unprepared
Trade the dot plot shift, not just the rate
Fed pause language often matters more than hikes
Federal Reserve (The Fed) Example
Say the Fed holds rates but two dots shift toward cuts. The dollar slides 100 pips in an hour while gold rallies $30. Nothing was cut. Expectations were, and expectations trade first.
How Traders Use Federal Reserve (The Fed)
Anchor every dollar view to the Fed path: priced cuts versus data reality. When payrolls and CPI disagree with the dots, position for the repricing, small into the meeting and with trend after it.
Related Terms
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