There is room for a bullish rebound with the rate cut, but…»: Daniel Muvdi

The renowned analyst warns about the risks of recession that can put headwinds on the markets.

The rate cuts would boost the markets in the medium term.

High volatility is expected in the markets with the rate cut. With the expected interest rate cut by the Federal Reserve (Fed), the Central Bank of the United States, the eyes of the market rest there. Although, this is not the only thing that matters for investors.

“What could affect the market will not be the rate cut itself, but the effects of a possible recession,” highlights the renowned trader Daniel Muvdi. The specialist, who works as head of markets at the Quantfury trading platform, attributes this situation to the weakness of the labor market in the economic powerhouse. According to his perspective, as the economic slowdown data becomes more pronounced, the market could begin to discount a recession. Given this scenario, “if the Fed makes excessive decisions today, it could generate panic,” he exclaims. In other words, he sums up that “Powell is taking a gamble today.”

He foresees high volatility for the markets because some expect the cut to be 0.25% and others 0.50%, which means that one part will not be happy with the result. “I expect some big moves,” he said about the main stocks and bitcoin (BTC). Although a rate cut reduces the cost of borrowing and increases liquidity, fostering demand in the markets, it also reflects weakness in the economy. Therefore, although Muvdi does not rule out upward reactions to this monetary policy, he sees it as key to closely monitor the next data that show signs of recession or not.

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