The pair finds some support after Tuesday’s nearly 4% slump, due to the surprise policy tweak by the Bank of Japan

The BoJ surprised markets by shifting their JGB defense from 0.25% to the 0.5% level. In response, the USDJPY declined by 2.6% to 133.27 as the JGB yield rose to a high of 0.432%. The central bank has used yield curve control since 2016 to manage interest rates at relatively low levels. The JPN225 also dropped as markets pondered the higher rates that companies would now pay on their debt,…

Chair Powell pointed to a higher-for-longer approach last week, which led to the end of the pair’s eight-week profitable streak, but shows resilience, as the RBNZ is also very hawkish

The pair treads water as markets digest this week’s rate hikes and hawkish commentary by the US Fed and the ECB

The ECB has followed the Fed and the BoE with its own 50bps hike. It also announced quantitative tightening from March 2023. Tone was hawkish, with the statement saying, “interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target.”

The US Federal Reserve slowed its tightening pace on Wednesday, but expects a higher terminal rate and delivered a largely hawkish message

FXCM’s USDOLLAR basket spiked on the news before settling, charting a long upper shadow (blue arrow). Notably, the hourly EMAs and the stochastic are in bullish mode (black ellipses). The greenback is showing signs of strength. However, the daily chart on the left shows that the dollar is still trading in its weak area between the lower blue and red bands. Dollar rallies may be targets. This is because US…

EURUSD is trading in its area of strength, between the upper blue and red bands (blue arrow), on its daily chart. Price appreciation is a likelihood the longer it maintains in this position. On the righthand side, the hourly chart also shows bullish signs, with the trend-following EMAs and the stochastic having both crossed positively (black ellipses). Momentum is near the 80+ region (red rectangle) and if it holds, a…

The pair jumped yesterday due to the downside surprise in US CPI, but treads water ahead of the Fed’s policy decision today, with the one from the European Central Bank following on Thursday

The headline CPI came in at 7.1% YoY, below the forecast of 7.3% YoY and less than last month's 7.7% YoY. The core CPI also moderated to 6% YoY. The consensus was at 6.1% YoY, and last month's print was 6.3%.

After Monday’s decline, the pair finds support today and awaits the US CPI inflation update and the latest policy decision by the Fed for the next leg of the move