FX traders are seeing a focus move over from geopolitical updates to central banks this week with no fewer than five major banks making rate calls and without a doubt the Federal Reserve will take centre stage. Despite the fact that the market has fully priced in a ‘no change’ call, traders are expecting to see some substantial moves on the back of the update when the final Jerome Powell led FOMC delivers its statement and he presides over his last press conference. The market has changed significantly since the conflict in the Middle East began and expectations of rate cuts have pulled back hard, odds of a 25-basis point cut by December now sitting at just 22% when previously the market was looking for cuts by mid-year. All eyes will be on exactly how far rate cut expectations have fallen in the Fed’s eyes’ relative to market pricing and that should see some big moves in the market with anything more hawkish likely to see yields and the dollar take off higher, whilst indications of cuts earlier in the year likely to lead to a sharp fall in the greenback.
USDJPY is trading again near annual highs on the Daily Chart despite a hawkish leaning from the Bank of Japan this week and anything more hawkish from the FOMC at the conclusion of their latest meeting could see the annual high at 160.46 come under threat. Shorter-term resistance at recent highs and the trendline around the 159.86 level will probably give bulls good stop loss entry levels for a move higher, whilst bears would look to leverage them if we do have a more dovish outlook from the committee. Support on the short-term trendline now comes in around the 158.50 level with stronger levels now sitting down just under 156.00.
Resistance 2: 160.46 – 2026 High and Trendline Resistance
Resistance 1: 159.86 – Trendline Resistance
Support 1: 158.49 – Trendline Support
Support 2: 157.57 – April Low
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