Markets Analysis

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 162.82
Resistance lineJPY 162.00 , JPY 161.28
Support 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 1.095
Resistance lineUSD 1.088 , USD 1.0903
Support 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 132.68
Resistance lineJPY 131.93
Support lineJPY 130.40 – JPY 130.65

Today’s Important Economic Indicators

Economic Indicators and EventsJST (Japan Standard Time)
Swiss Central Bank Policy Rate announcement17:30
Bank 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.