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FOREX: Cautious Powell Stokes Greenback Reversal

FOREX
  • The greenback has been regaining lost ground throughout the June FOMC press conference as Chair Powell confirmed participants had access to the May CPI data before finalising their economic projections that point to just one Fed cut in 2024.
  • The cautious tone of the Fed Chair and the consistent reminder of focusing on the totality of the data has seen USDJPY climb around one big figure and back towards the 157.00 mark, although the pair remains shy of the pre-CPI levels around 157.20.
  • A more subdued reaction for EURUSD which sits just 50 pips off the session highs of 1.0852 and holds onto the bulk of today’s rally. Today’s sharp reversal higher sees the pair back above the 20- and 50-day EMAs. A continuation higher would undermine the recent bearish theme and instead signal scope for a test of key short-term resistance at 1.0916, the Jun 4 high.
  • There have been similar size reactions seen for both AUDUSD and NZDUSD as equities remain in the green for now. AUDUSD remains up 0.90% approaching the APAC crossover.
  • Recent swings in price action mean that for now, the pair remains inside a range. Key resistance has been defined at 0.6714, the May 16 high and key support lies at 0.6576, the Jun 10. The two price points also represent key short-term directional triggers.
  • Moves come ahead of Thursday’s Australian employment figures, which will be the highlight of the APAC docket. Focus will then turn to US PPI data and Friday’s Bank of Japan decision.
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