U.S. FOMC decides to raise interest rates, new concerns emerge, and yen buying may prevail【March 23, 2023】
Fundamental Analysis
U.S. FOMC Decides to Raise Interest Rates, Prioritizing Inflation Control as Expected by Market
FRB Chair Powell also mentioned the possibility of a rate hike halt
FOMC reportedly considered suspending rate hikes due to turmoil in financial institutions
New Concerns for First National Bank and PacWest Bank
Signs of new U.S. regional bank problems, risk-off movement
Treasury Secretary Yellen says she is not considering full deposit protection
Major U.S. stock indexes were sharply lower, with financial stocks selling off
400 billion of the USD 900 billion in U.S. real estate debt is due by the end of the year
Expect many instances of difficult negotiations due to bank risk
U.K. consumer price index at 10%, lowering the prospect of a rate cut by the end of the year
ECB President Lagarde reiterates emphasis on inflation control
Technical Analysis
The FOMC decided to raise interest rates, indicating its priority on inflation control even amid the turmoil in financial institutions. Immediately after the policy rate announcement, the dollar sold off against the yen and the dollar/yen dropped sharply. The pound sterling and euro rose sharply on the prospect of further rate hikes. We will keep a sell-back policy for the Cross Yen as a whole and a push-buy policy for the Eurodollar and the Pound Dollar.
Pound Sterling Yen (GBPJPY)
Analyzing the 1-hour chart of GBPJPY, the pair is slightly rebounding at the 161-yen level, but the yen is still buying in the forex market, and analyzing the GMMA, the short-term GMMA is about to break below the long-term GMMA, and a break below JPY 160.80 could lead to a decline to the JPY 160.30 area.
Today is the Bank of England’s policy rate announcement, so we need to be very careful with our positions.
Estimated rangeJPY 159.30 – JPY 162.82Resistance lineJPY 162.00 , JPY 161.28Support lineJPY 160.25
Euro/Dollar (EURUSD)
Analyzing the daily chart of the Eurodollar, a major resistance at USD 1.0884 is in sight, but on a daily basis, the pair is aiming for USD 1.10, which is a round number and near recent highs.
At the moment, the euro continues to be bid for the fifth day in a row. We should pay close attention to the possibility of a sudden movement of adjustment.
Estimated rangeUSD 1.078 – USD 1.095Resistance lineUSD 1.088 , USD 1.0903Support lineUSD 1.08270
Dollar/Yen (USDJPY)
Analyzing the daily chart of the US dollar/JPY, the market had been unclear about the direction of the market before the FOMC meeting, but the decision to raise interest rates as expected and Chairman Powell’s dovish comments on the suspension of interest rate hike led to the yen’s buying power.
The candlestick showed the shape of an outside bar. Considering the fundamentals, we expect the yen to continue to buy. It is conceivable that the yen may fall to the recent low around JPY 130.50.
Estimated rangeJPY 129.68 – JPY 132.68Resistance lineJPY 131.93Support lineJPY 130.40 – JPY 130.65
Today’s Important Economic Indicators
Economic Indicators and EventsJST (Japan Standard Time)Swiss Central Bank Policy Rate announcement17:30Bank of England Policy Rate Announcement21:00
*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.
Risk Disclaimer
This analysis is for educational purposes only and does not constitute investment advice. Trading forex and CFDs involves significant risk and may not be suitable for all investors. Past performance is not indicative of future results.
This analysis is for educational purposes only and does not constitute investment advice. Trading forex and CFDs involves significant risk and may not be suitable for all investors. Past performance is not indicative of future results.
