Should We Keep a Close Eye on the U.S. Dollar Following the FOMC Meeting, After It Weakened on Hints of a September Rate Cut?

Should We Keep a Close Eye on the U.S. Dollar Following the FOMC Meeting, After It Weakened on Hints of a September Rate Cut?

01.08.2024

In the U.S. currency market yesterday, although the Federal Open Market Committee (FOMC) kept the policy interest rate unchanged at 5.25–5.50%, the U.S. dollar became the weakest currency immediately after the meeting following remarks by Federal Reserve Chair Powell regarding a potential rate cut at the next meeting in September.The USD/JPY pair fell from 153.907 to 149.628, breaking below the 20-period moving average (MA) on the hourly chart. On the 4-hour chart, the pair reached the -3σ level of the Bollinger Bands, and on the daily chart, it has broken below the 200-period simple moving average (SMA).

Despite the preliminary July Harmonized Index of Consumer Prices (HICP) for the eurozone, released yesterday, showing a year-over-year increase to 2.6% from 2.5% the previous month, the euro weakened alongside the U.S. dollar. The euro/yen pair fell from 166.545 to 162.055.During today’s Asian trading session, it has fallen further to 160.882. We will be watching closely to see if the euro continues to weaken against the yen.

Today’s economic indicators include Japan’s foreign and domestic securities investment and South Korea’s trade balance at 8:50; Indonesia’s manufacturing PMI at 9:30; Australia’strade balance, at 16:00: Turkey’s Manufacturing PMI, at 16:50: France’s Manufacturing PMI, at 16:55: Germany’s Manufacturing PMI, at 17:00: Eurozone Manufacturing PMI, at 17:30: Hong Kong’s Retail Sales,UK Manufacturing PMI at 17:30, Eurozone Employment Statistics at 18:00, BOE Policy Rate and Statement at 20:00, UKpress conference by BOE Governor Bailey, U.S. nonfarm labor productivity at 21:30, U.S. PMI at 22:45, U.S. construction spending at 23:00, and the U.S. ISM Manufacturing Index are scheduled.We will be closely monitoring the U.S. dollar following the FOMC meeting, as it has weakened on hints of a September rate cut.