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FOREX: USDJPY Sinks Post-Fed, Technical Outlook Remain Bearish

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  • The majority of the action in currency markets following the Fed has been for the Japanese Yen, as the bull steepening for the treasury curve provided a significant JPY boost, undeterred by the strong rally for US equities. The moves come as the Federal Reserve decided to slow the pace at which it is reducing Treasuries holdings in its balance sheet to a cap of USD5 billion per month from USD25 billion previously.
  • USDJPY was sharply lower post the decision falling around 50 pips from 149.90 to 149.40 ahead of Chair Powell’s press conference. The pair then gathered momentum to the downside through the earlier post-BOJ lows at 149.14, falling as low as 148.67.
  • Overall, moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend - this suggests short-term gains over the past week are corrective. Support is not seen until 147.75, the March 14 low.
  • On the session as a whole, the greenback remains firmer against most G10 peers, emphasised by the 0.3% gains for the ICE dollar index.
  • Weakness for EURUSD standout, having spent a large portion of the session back below the 1.0900 handle. Early slippage was on the back of wider risk concerns relating to the Turkish newsflow relating to the arrest of Istanbul mayor and key opposition figure Ekrem Imamoglu. Initial EURUSD support remains much lower – at 1.0761 and 1.0721, the 20-day EMA.
  • Australia will release February employment data on Thursday keeping AUDUSD (-0.16%) in focus, particularly important given the RBA said that the strong labour market would have been the key reason to leave policy on hold in February.
  • 0.6400 continues to provide solid pivot resistance for the pair, having not closed above this level since early December. Clearance of 0.6409, the Feb 21 high, would be required to strengthen a bull cycle and confirm a resumption of the uptrend that started Feb 3. On the downside, initial support to watch is 0.6259, the Mar 11 low.
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  • The majority of the action in currency markets following the Fed has been for the Japanese Yen, as the bull steepening for the treasury curve provided a significant JPY boost, undeterred by the strong rally for US equities. The moves come as the Federal Reserve decided to slow the pace at which it is reducing Treasuries holdings in its balance sheet to a cap of USD5 billion per month from USD25 billion previously.
  • USDJPY was sharply lower post the decision falling around 50 pips from 149.90 to 149.40 ahead of Chair Powell’s press conference. The pair then gathered momentum to the downside through the earlier post-BOJ lows at 149.14, falling as low as 148.67.
  • Overall, moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend - this suggests short-term gains over the past week are corrective. Support is not seen until 147.75, the March 14 low.
  • On the session as a whole, the greenback remains firmer against most G10 peers, emphasised by the 0.3% gains for the ICE dollar index.
  • Weakness for EURUSD standout, having spent a large portion of the session back below the 1.0900 handle. Early slippage was on the back of wider risk concerns relating to the Turkish newsflow relating to the arrest of Istanbul mayor and key opposition figure Ekrem Imamoglu. Initial EURUSD support remains much lower – at 1.0761 and 1.0721, the 20-day EMA.
  • Australia will release February employment data on Thursday keeping AUDUSD (-0.16%) in focus, particularly important given the RBA said that the strong labour market would have been the key reason to leave policy on hold in February.
  • 0.6400 continues to provide solid pivot resistance for the pair, having not closed above this level since early December. Clearance of 0.6409, the Feb 21 high, would be required to strengthen a bull cycle and confirm a resumption of the uptrend that started Feb 3. On the downside, initial support to watch is 0.6259, the Mar 11 low.