Will the U.S. dollar experience sharp fluctuations following the FOMC meeting after the release of the U.S. CPI? Caution is advised.

Will the U.S. dollar experience sharp volatility at the FOMC meeting following the release of the U.S. CPI? Caution is advised.

13.12.2023

In yesterday’s U.S. currency trading, the U.S. dollar recovered from a temporary decline and rose during U.S. trading hours after the November U.S. Consumer Price Index (CPI), released yesterday, showed a year-over-year increase of 3.1%, down 0.1 percentage points from the previous month’s 3.2%. The USD/JPY pair fell from 146.163 to 144.734 before recovering to 145.822.During today’s Asian session, the market has shown no clear direction and is stagnating just below the 20-period moving average on the hourly chart. We should remain vigilant regarding whether today’s FOMC meeting will trigger significant movements in the U.S. dollar.

Ahead of tomorrow’s Swiss National Bank (SNB) policy rate announcement, the Swiss franc strengthened against the Japanese yen. The USD/CHF pair fell from 0.8788 to 0.8721.This marks the second consecutive day of decline following a touch of the 20-day moving average on the daily chart. We need to carefully assess whether the Swiss franc will continue to strengthen against the US dollar, or whether currency strength will remain in a stalemate depending on today’s early-morning FOMC meeting and tomorrow’s SNB announcement.

Today, at 4:00 PM, UK GDP, UK Industrial Production, UK Manufacturing Production, and Sweden’s Services PMI will be released; at 7:00 PM, EurozoneIndustrial Production, South African Retail Sales at 8:00 PM, India’s Money Supply at 8:30 PM, the U.S. MBA Mortgage Applications Index at 9:00 PM, the U.S. Producer Price Index at 10:30 PM, the FOMC policy rate decision and statement at 2:00 AM, and a press conference by Fed Chair Powell at 2:30 AM.We need to remain highly vigilant regarding price movements, as the US dollar is likely to experience significant volatility following the release of the US CPI and the FOMC meeting.