FOMC guide: hawkish Fed risks for Nasdaq, gold and FX

The Federal Reserve is expected to hold the policy rate at 3.50%–3.75% at the June FOMC, while markets have rapidly shifted to a higher-for-longer outlook. Fed funds futures imply roughly a 77% probability of a rate increase by December 2026.

The policy statement, updated economic projections and the dot plot will be released on 18 June at 2:00 a.m. Singapore time, followed by Chair Kevin Warsh’s first press conference at 2:30 a.m. Traders do not expect a change in the target rate at the meeting; attention is on guidance, the dot plot and inflation projections.

Market participants are watching whether the Fed will remove language implying future cuts, whether the dot plot will show fewer cuts or penciled-in hikes, and whether inflation forecasts are revised higher. Those items will shape near-term positioning across currencies, commodities and equities.

Market pricing has moved quickly. The implied probability of a December rate hike rose from about 24% a month earlier to roughly 77% despite a fall in oil prices after a recent US‑Iran interim peace agreement. The shift reflects lower odds of cuts in 2026 and higher odds of sustained policy rates or an eventual hike.

A likely outcome is that the Fed holds the rate but adopts tighter forward guidance: the easing bias may be removed, the dot plot could shift upward and inflation projections may be set higher. Statements and Warsh’s tone are expected to drive initial market moves.

Currency pairs are expected to react to incremental hawkishness. A firmer dollar would pressure EUR/USD, GBP/USD and AUD/USD. Short-term technical levels to watch include EUR/USD resistance around 1.1645–1.1660 and support at 1.1575, 1.1554 and 1.1510. AUD/USD faces resistance near 0.7120 and support near 0.7030, 0.6980 and 0.6945. USD/JPY would likely strengthen, with market participants noting intervention risk as levels approach 160.65.

The Nasdaq 100, which is sensitive to rate expectations, may underperform if the Fed signals fewer cuts. Key short-term levels are resistance at 30,530 and support at 29,700; a close below 29,700 would expose 29,170 and 28,280. Gold prices generally fall when real yields rise and the dollar strengthens; short-term resistance sits near 4,432–4,466 and support near 4,309, 4,242–4,220 and 4,171.

WTI crude has been volatile since the US‑Iran interim peace agreement and remains driven by geopolitics; a firmer dollar and higher real yields could add downward pressure. The Reserve Bank of Australia’s recent hold at a 4.35% cash rate offers some local support to the Australian dollar, but Federal Reserve guidance is likely to dominate the near-term FX narrative.

Market participants are cautioned against trading only the initial 2:00 a.m. SGT release. Initial price moves can reverse once the press conference begins and participants reassess the dot plot, updated forecasts and the Chair’s answers.