If you only have one chart that you can watch in trying to make sense of the FOMC meeting decision later today, this would be my pick.

Despite the Fed saying that they are in pause mode while looking to hold rates higher for longer, Treasury yields have been on the rise and even briefly hitting its highest levels since 2007 earlier this week in the case of 10-year yields.

This arguably remains the most important spot to watch in trying to gauge how the Fed decision impacts broader market sentiment, so let’s discuss the possibilities and potential.

The Fed decision in itself is a given, in that they will not be raising rates today. But instead, the most important things will continue to be the language and communication – which I would expect to be similar to the last meeting.

Policymakers are likely to allude to being data dependent and with the US economy staying rather resilient so far, there’s no reason to mess with things for now. If it ain’t broke, don’t try to fix it.

Meanwhile, the next thing to watch today will be the economic projections and dot plots. The latter will now be of less importance in my view but the former will be something to be mindful of.

If the Fed continues to see the economy as staying more resilient and the data supports that view, that is good reason to keep expecting yields to stay higher for longer alongside interest rates. And in turn, that will keep the dollar underpinned in the big picture.

And if we do get a breakout higher in 10-year yields above 4.36%, there might be more pain in markets especially for equities especially with higher oil prices also a concerning factor.

This article was written by Justin Low at www.forexlive.com.