With the U.S. FOMC meeting approaching, should we keep an eye on the direction of the U.S. dollar, which has become the strongest currency?

With the U.S. FOMC meeting approaching, should we keep an eye on the direction of the U.S. dollar, which has become the strongest currency?

01.05.2024

Yesterday, the three major U.S. stock indices all fell, resulting in a market environment characterized by falling stock prices, rising interest rates, and lower crude oil prices. WTI crude oil fell by about 1.5% to $81.2.Natural gas, meanwhile, fell 4.5% and is trading around $1.95. All five major precious metals declined, with silver seeing the sharpest drop, falling 2.6% from the previous day to trade in the $26.3 range.

Ahead of today’s U.S. FOMC meeting, the U.S. dollar emerged as the strongest currency during U.S. trading hours. The USD/JPY pair rebounded from 156.062 to 157.801, recovering to around half the extent of the sharp decline seen the day before yesterday.On the hourly chart, the pair is trading above the 20-period moving average (MA), and on the 4-hour chart, it is rebounding above the 10-period MA. However, on the daily chart, the RSI has exceeded 70, so traders should be cautious of a potential decline during European trading hours.

Today’s economic indicators include New Zealand’s employment report at 7:45, South Korea’s trade balance at 9:00, a press conference by RBNZ Governor O’Hara at 10:00, the UK’sManufacturing PMI at 17:30, U.S. MBA Mortgage Applications at 20:00, U.S. ADP Employment Report at 21:15, U.S. PMI at 22:45, U.S. Construction Spending at 23:00,U.S. JOLTS Job Openings, U.S. ISM Manufacturing Index, at 27:00 the U.S. FOMC policy rate decision and statement, at 27:30 a press conference by U.S. Federal Reserve Chair Powell, and at 29:15 remarks by Canadian BOC Governor McClem are scheduled.We need to remain highly vigilant regarding the direction of the U.S. dollar, which has become the strongest currency ahead of the U.S. FOMC meeting.