With the 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 $81.20.Natural gas fell as much as 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 $26.30 range.

Ahead of today’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 a level near half of the previous day’s sharp decline.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 caution is advised regarding 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’s manufacturing PMI at 17:30, the US MBA mortgage applications index at 20:00, the US ADP employment report at 21:15, the US PMI at 22:45,at 11:00 PM: US Construction Spending, US JOLTS Job Openings, and US ISM Manufacturing PMI; at 3:00 AM: US FOMC policy rate decision and statement release; at 3:30 AM: US Fed Chair Powell’s press conference; and at 5:15 AM: remarks by Canadian BOC Governor McClem. We must remain highly vigilant regarding the direction of the US dollar, which has become the strongest currency ahead of the US FOMC meeting.