With the 0.25% rate cut weighing on the dollar’s upside, should we be wary of its downside potential?

With the 0.25% rate cut weighing on the dollar’s upside, should we be wary of its downside potential?

08.11.2024

In the U.S. currency market yesterday, the dollar weakened slightly following the release of the FOMC statement, which, as widely expected, announced a 0.25% cut in the policy interest rate. The USD/JPY pair fell from 154.697 to 152.692.On the hourly chart, the price has moved from above the 20-period moving average (MA) to below it. On the 4-hour chart, the price has broken below the support line formed by the 20-period MA, and on the daily chart, a pullback has occurred from the +2σ level of the Bollinger Bands.

Among European currencies, the euro fell against the yen. The EUR/JPY pair dropped from 165.962 to just above the 165 level. It broke below the 200-period SMA on the hourly chart with a real body candle. On the 4-hour chart, it has already broken below the 75-period MA, which had previously provided support, and on the daily chart, the price is beginning to move downward from just below the 200-period SMA. Therefore, we should pay close attention to price movements during European trading hours.

Today's key events include remarks by BOE Deputy Governor Breeden at 11:30, Japan's Leading Economic Index at 14:00, France'strade balance and current account balance, remarks by UK MPC member Pill at 21:15, Canadian employment data at 22:30, the University of Michigan Consumer Sentiment Index at 24:00, remarks by US Fed Governor Bowman at 25:00, and remarks by US St. Louis Fed President Musalem at 28:30.We should remain highly vigilant regarding the downside potential for the US dollar, which has faced resistance following the 0.25% rate cut.