All eyes are on whether the U.S. dollar can rebound on the day before the FOMC meeting

All eyes are on whether the U.S. dollar can rebound on the day before the FOMC meeting

21.03.2023

U.S. currencies edged lower during U.S. trading hours yesterday, causing the U.S. dollar to decline. The USD/JPY pair fell by about 2 yen, from 132.627 to 130.539, forming a downtrend along the 20-period moving average (MA) on the hourly chart.On the higher-time-frame 4-hour chart, the pair is extending its decline after encountering resistance at the 10-period moving average. During today’s Asian session, the pair has faced heavy selling pressure at lower levels and is attempting to rebound. Ahead of tomorrow’s FOMC meeting, we will be closely monitoring whether the U.S. dollar can recover and move higher.

European currencies saw the euro strengthen against the U.S. dollar following remarks yesterday by ECB President Lagarde that “price stability and financial stability are compatible.”The EUR/USD pair rose by about 100 pips, from 1.0630 to 1.0730. It is climbing, supported on the downside by the daily 200 EMA. Since yesterday’s rally pushed the EUR/USD well above the 4-hour 200 SMA, it will be interesting to see if the pair continues to rise after a correction.

Today, during European trading hours, Switzerland’s trade balance will be released at 16:00, Hong Kong’s overall balance at 17:30, Poland’s retail sales at 18:00, and Germany’sZEW Economic Sentiment Survey, and the Eurozone ZEW Economic Sentiment Survey are scheduled for release. During U.S. trading hours, the Canadian Consumer Price Index is set for 21:30, followed by remarks from ECB President Lagarde at 23:00, U.S. Existing Home Sales at 23:00, and a U.S. 20-year Treasury auction at 26:00.We will be closely monitoring price movements to see if the U.S. dollar can recover on the day before the FOMC meeting.