Who’s up for trading the dollar during the FOMC decision?
If you are, then you’ll want to take a closer look at where USD/JPY is trading right now and what it could mean for its weeks-long trend!
Before moving on, ICYMI, yesterday’s watchlist checked out NZD/USD’s descending channel ahead of the U.S. CPI release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
NFIB Business Optimism Index for November: 90.6 (90.9 forecast; 90.7 previous)
U.S. Consumer Price Index change for November: 3.1% y/y (3.1% y/y forecast ; 3.2% y/y previous); Core CPI at 4.0% y/y as expected/previous
New Zealand current account deficit for Q3: 11.47B NZD (-12.15B NZD forecast, -4.65B NZD previous)
New Zealand’s food price index for November: -0.2% m/m (-0.9% m/m previous)
Westpac revised its NZ Q4 inflation estimates down from 0.6% to 0.3% after New Zealand’s weaker-than-expected food price inflation
Japan’s Tankan manufacturing index for Q4 2023: 12 (10 forecast, 9 previous), Non-manufacturing index at 30 (27 forecast and previous)
U.K.’s GDP for October: -0.3% m/m (-0.1% m/m forecast, 0.2% m/m previous)
U.K.’s industrial production for October: -0.8% m/m (-0.1% m/m forecast, 0.0% m/m previous)
Price Action News
Overlay of NZD vs. Major Currencies Chart by TradingView
With not a lot of volatility ahead of the FOMC statement, NZD’s drop during the Asian and early European sessions was more pronounced.
There was no direct catalyst for the move though some speculate that a weaker-than-expected food price index and Westpac downgrading New Zealand’s Q4 inflation estimates may have played a hand in NZD’s losses.
NZD has since pulled back by a few pips. It’s still in the red across the board, though, with the biggest losses seen against USD, CAD, and AUD and the least losses registered against GBP and JPY.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. PPI reports at 1:30 pm GMT
U.S. crude oil inventories at 3:30 pm GMT
FOMC statement and projections at 7:00 pm GMT
FOMC presser at 7:30 pm GMT
New Zealand’s Q3 GDP at 9:45 pm GMT
Japan’s core machinery orders at 11:50 pm GMT
Australia’s labor market data at 12:30 am GMT (Dec 14)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
USD/JPY 15-min Forex Chart by TradingView
USD/JPY has been showing us lower highs and lower lows since mid-November when the pair found resistance at the 152.00 psychological handle.
We’re taking a closer look at the 15-minute chart today because USD/JPY looks like it’s having trouble extending its upswing beyond the 145.75 area.
As you can see, 145.75 isn’t too far from the R1 (146.18) Pivot Point level as well as a trend line resistance that USD/JPY bears have been successfully defending since the drop from 152.00.
Let’s see if today’s FOMC statement, revised projections, and presser can shake up USD/JPY’s price action long enough to let us know if the pair can sustain its downtrend.
After seeing the latest U.S. inflation and labor market numbers, the markets mostly expect the Fed to recognize some progress against high inflation but also maintain its readiness to tighten its policies if necessary.
Unless we see more aggressive pushback against interest rate cut speculations, USD could lose pips against its counterparts including JPY.
USD/JPY, which is trading near a key resistance zone, could draw in enough selling pressure to drag the pair back down to areas of interest like 145.00 or even 143.00.
As the FOMC Statement Event Guide suggests, though, it’s probably more prudent to wait until after the event before you place any positions. After all, the actual release and the presser scheduled 30 minutes after the statement may result in volatility spikes that could take out your positions.
Good luck and stay vigilant when entering USD positions during a Fed event!
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