🌍 Both USD and JPY Strengthen Amid Complex Market Conditions
Markets Seek New Direction After FOMC and Rising Middle East Tensions
This week, the forex market is reflecting a "risk-off" sentiment, with both the US dollar and Japanese yen being bought simultaneously. The US dollar has remained strong following the FOMC, with the Dollar Index breaking above its 10-day moving average and heading toward the 21-day average. Supporting factors include speculation about U.S. military action against Iranian nuclear facilities and hawkish comments from Fed Chair Powell.
Meanwhile, yen buying is intensifying in the cross-yen pairs, particularly in GBP/JPY and EUR/JPY, signaling persistent market caution.
🏦 FOMC: No Change in Rate Cut Outlook, Yet Still a Tailwind for USD
As expected, the Fed left rates unchanged. The dot plot showed no major shift in outlook, maintaining the projection for two rate cuts later this year. However, Powell mentioned that tariffs could push inflation higher, causing the market to temporarily scale back expectations for 2024 rate cuts.
This combination of risk aversion and delayed rate cut pricing has supported USD buying.
💱 Cross-Yen Pairs Weaken Amid Risk-Off, While USD/JPY Recovers
Cross-yen pairs have softened as yen-buying pressure rises. EUR/JPY, GBP/JPY, and AUD/JPY are under pressure, while USD/JPY is trying to recover. However, clear trends remain elusive amid heightened caution.
Note: The U.S. market is closed today for Juneteenth (Emancipation Day), so volatility may be subdued.
🌐 Watch for BOE & SNB — Possible Turbulence in GBP and CHF
Multiple central bank events are scheduled during London hours:
🇬🇧 Bank of England (BOE)
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Expected to keep rates at 4.25%
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Markets are pricing in two rate cuts later this year
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Focus: How the 9-member vote splits. Last time: “5-2-2” with a dovish tilt
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Weak UK economic data (jobs, GDP) adds to rate cut pressure
🇨🇭 Swiss National Bank (SNB)
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Expected to cut rates to 0.00%
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Possibility of reintroducing negative rates
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However, geopolitical tensions may support CHF as a safe haven, limiting downside
📢 Key Speakers Today:
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🇪🇺 ECB President Lagarde
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🇫🇷 Bank of France Governor Villeroy de Galhau
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🇩🇪 Bundesbank President Nagel
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🇪🇸 Spanish Central Bank Governor Escrivá
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🇮🇹 ECB Vice President de Guindos
These central bankers' comments could become fresh catalysts for the FX market.
