WEEKLY REVIEW: The Fed kept its monetary policy unchanged, but markets are likely to remain volatile

The Fed released its interest rate decision yesterday. The Fed kept its monetary policy unchanged, saying that the slowdown in the global economy and low inflation expectations were main reasons for this decision.

FOMC members voted 9-1 to keep interest rates unchanged. Only Richmond Fed President Jeffrey Lacker voted to raise interest rate by 0.25%.

GDP for 2016 and 2017 were downgraded.

The Fed said that it will start raising its interest rates if the U.S. economy will stay on track to reach "longer-run goals of maximum employment and inflation of 2 percent".

If the Fed starts raising its interest rates this year, it is likely that it will be at the December monetary meeting, despite the Fed Chairwoman Janet Yellen's comment that the interest rate hike in October is possible. The statement by the Fed was too dovish to start hiking interest rates soon. Many market participants do not expect the interest rate hike this year.

The markets are likely to remain volatile despite the small likelihood for the interest rate hike in October. Market participants will monitor closely every major economic report from the U.S. The guessing game is likely to continue.

Greece should turn again in focus at the beginning of the next week. The election will be held on Sunday. It will need time to form a government. The implementation of the bailout obligations is likely to suffer.

It is likely that the currency pair EURUSD will test the level at $1.1500, maybe even the level of $1.1600, if the U.S. economic data will negative and there will be no negative news from Greece and the Eurozone as whole.

If the U.S. economic data is positive and in case of the negative news from the Eurozone, the currency pair EURUSD may test the level of $1.1300 or $1.1213 (the low of 1.1213).