Should investors be wary of a pre-FOMC pullback?
21.07.2022
- Philadelphia Fed Business Outlook Index
- U.S. Weekly Natural Gas Inventories
In the previous day’s U.S. currency trading, the dollar index had fallen to the low 106s, causing the USD/JPY pair to trade in a range of approximately 60 pips between 137.906 and 138.458.During today’s Asian session, the Bank of Japan announced its policy rate, and the pair has been fluctuating within a range similar to yesterday’s. On the daily chart, a divergence is visible where the candlesticks and the RSI are moving in opposite directions, so we should be wary of a corrective decline ahead of the FOMC meeting.
European currencies are trading nervously ahead of today’s ECB policy rate announcement, with the euro/dollar pair falling approximately 110 pips from 1.0270 to 1.0156. However, it has regained momentum during today’s Asian session and has broken above the 20-period moving average on the hourly chart. While it remains above the 75-period moving average on the 4-hour chart, we will be watching closely to see if the upward trend continues.
Today’s key events include remarks by MPC member Pill at 5:00 PM, the TCMB policy rate and statement at 8:00 PM, and at 9:15 PM, theECB policy rate and statement at 9:15 PM, U.S. initial jobless claims and the Philadelphia Fed Business Outlook Index at 9:30 PM, ECB President Lagarde’s press conference at 9:45 PM, the U.S. Leading Economic Index at 11:00 PM, and U.S. weekly natural gas inventories at 11:30 PM. We need to be on guard to see if this will create a market environment where the Japanese yen is sold off again.
Author: Keisuke Sakurai
