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Greenback Marginally Lower Following Powell Remarks, JPY Leads Gains

FOREX
  • Despite some volatile price action following Fed Chair Powell’s remarks on Tuesday, the USD index sits just moderately lower on Tuesday approaching the APAC crossover. With Powell once again leaning into the disinflation process narrative, global equity indices are advancing into the close, providing a less optimistic backdrop for the USD.
  • Greenback weakness has been led by USDJPY where the majority of the downward price action was seen in the lead up to Chair Powell’s remarks. The reversal has been helped by the overall technical outlook remaining bearish and the pair holding the 50-day exponential moving average almost perfectly on Monday around 132.90.
    • Tuesday’s selloff was then exacerbated by short-term positioning and the pair filling the gap from Sunday’s open between 131.60-131.20. Although some further weakness ensued on Powell, to print fresh lows at 130.48, those losses have been pared and USDJPY remains close to unchanged on the week.
  • The Euro has underperformed, largely led by the move lower in EURJPY. However, EURUSD did extend to fresh four-week lows of 1.0669, coming within two pips of 1.0667, the 50-day EMA and a key support.
  • AUDUSD (+0.89%) sits higher for the first session in four following the RBA rate decision, at which the bank raised rates by 25bps to 3.35%, and hinted that another 50bps of rate rises could be still to come in an effort to rein in inflation.
  • There are no major economic data releases on Wednesday which places the focus on the speaker slate. Fed’s Williams, Cook, Barr, Bostic, Kashkari and Waller may make remarks.
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