Forex markets were a touch livelier yesterday and overnight, thanks to monetary policy announcements from the US Federal Reserve and the Bank of Japan (BOJ). Last night, the Fed announced a 25-basis point rate cut, in line with market expectations. The Dollar Index was little moved. But it then rallied and came within a cent of hitting 99.00. This followed Fed Chair Jerome Powell’s press conference, where he said that another rate cut in December was not a foregone conclusion.
Once again, the 99.00 level acted as resistance, and the Index subsequently pulled back. But it has crept higher again this morning and looks as if it may test resistance again. Overnight, the BOJ kept rates unchanged as expected. But it said it stood ready to raise rates should economic conditions come out in line with its projections.
Despite this, the Japanese yen was sharply lower against all the majors this morning. Investors are predicting how the yen may fare as Japan’s new Prime Minister Sanae Takaichi favours fiscal stimulus and low interest rates to boost economic growth. The USD/JPY broke above an area of mild resistance, going on to hit its highest level in over ten months. The EUR/JPY rallied to its highest level in history, although in fairness, that history only goes back to the adoption of the euro in 1999.
Source: TN Trader
