Date: 10 Apr 2019
The US Dollar Index has been coming under increasing selling pressure ahead of the FOMC meeting minutes later today, as traders and investors expect that the minutes from the last Federal Reserve policy meeting will show that Federal Open Market Committee is currently in no rush to hike interest rates this year.
The greenback has been coming under pressure across the board, with the Japanese yen and the Australian Dollar leading the fightback. The general downbeat tone towards the US Dollar this week highlights the growing belief that the Federal Reserve is unlikely to turn hawkish until U.S inflation and global growth start to pick-up.
Last months Federal Reserve policy decision saw FOMC members respective dot-plots turning more bearish, as they downgraded their long-term interest rate forecasts.The Federal Reserve also announced an end to its balance sheet reduction programme and offered its strongest warning about weakening global growth.
Recent data from the U.S economy has been mixed since the last policy meeting, with inflation and wage growth remaining muted, despite optimistic signs when average hourly earnings started to rise inside the February Non-farm payrolls job report.
The March job report continued to show that the U.S labour market remains robust while the manufacturing sector has started to pick-up after trending lower for much of the year. Recent positive statements from Sino-U.S trade talks has also helped the U.S stock market advance and improve global risk sentiment.
Many market participants dismiss the importance of the FOMC meeting minutes, although it is worth noting that the final text of the minutes can be revised right up to the final moments before its release. The USD/JPY pair has been retracing a portion of its recent gains, as the U.S Dollar slides lower into the releases of today’s FOMC meeting minutes.
USD/JPY Daily Mountain Chart | Source: ActivTrader
Technically, the USD/JPY pair will only come under further selling pressure below the 110.90 level, while major weekly support is found at the 110.65 and 110.40 levels. To the upside, major weekly resistance is currently located at the 111.65 and 112.20 levels.
Written by Nathan Batchelor, External Analyst
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