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USD Weakness Extends As Powell Confirms Disinflation Process Started

FOREX
  • Despite a moderate pop higher for the greenback on the Fed’s guidance on rates remaining close to unchanged, markets quickly faded the moves. As Chair Powell confirmed the easing of price pressures and the fact the disinflation process has started, substantial greenback weakness has ensued.
  • The USD index sits just over 1% weaker on the session and has extended on multi-month lows on Wednesday, continuing to press on session lows approaching the APAC crossover.
  • The best performers are the Euro and the Japanese yen, along with the Australian dollar which is benefitting from the renewed optimism in equity markets.
  • For EURUSD, technical bulls remain in the driver’s seat and the bull trigger at 1.0929, the Jan 26 high, has been breached. The break resumes the uptrend and initially targets 1.1022, 3.00 proj of the Sep 28 - Oct 4 - Oct 13 price swing.
  • In USDJPY, the trend direction is down with price holding below resistance at 131.58, the Jan 18 high and below the 20-day EMA, at 130.57. The resumption of weakness now opens 126.81, a Fibonacci projection – with the bear trigger situated at 127.23, Jan 16 low.
  • The focus quickly turns to the next major central bank meetings on Thursday with both the BOE and ECB decisions scheduled.
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