The US Federal Reserve’s Dovish Rate Cut Triggers a Stock Market Crash【December 19, 2024】
December 19, 2024
Markets Analysis
目次
Fundamental Analysis
- US Stock Market in Turmoil: Rate Cuts Reduced to Two Next Year
- The Dow Jones Industrial Average has fallen for 10 consecutive days, marking its longest losing streak in 47 years.
- USDJPY surged to 154.80, as market participants await the outcome of the Bank of Japan (BOJ) meeting.
USDJPY Technical Analysis
Analyzing the daily chart of USDJPY, the pair rebounded at the 72-day moving average and is approaching the 155.00 mark, indicating a strong trend of JPY weakness and USD strength.
The Federal Reserve cut interest rates, reducing the policy rate to 4.25%. However, the forecast for rate cuts next year was revised down from three to two. Markets interpreted this as hawkish, leading to a sharp decline in US equities.
Today, the BOJ is scheduled to announce its policy decision and hold a press conference. The policy rate is expected to remain at 0.25%. With the probability of a narrowing US-Japan interest rate differential remaining low, JPY has continued to weaken.
JPY depreciation is anticipated today, so traders should be cautious with their position management.
Day trading strategy (1 hour)
On the 1-hour chart, USDJPY surged following the FOMC announcement, nearing the 155.00 level. The BOJ is expected to maintain its policy rate, suggesting a strong likelihood of continued JPY depreciation.
The MACD histogram is steadily increasing, and the daily ADX indicates strengthening trends. The 1-hour ADX is also expected to show rising momentum.
For day trading, a buy-on-dip strategy is advisable. Anticipating no rate hike from the BOJ and further JPY weakening, traders should consider buying on pullbacks. However, it is prudent to observe the market’s reaction to major events, with a strategy to target levels near 156.75 after the London session begins.
Support/Resistance lines
Key support and resistance lines to consider:
- 156.75: Recent daily high
- 155.550: Key psychological level
Market Sentiment
USDJPY Sell: 58% Buy: 42%
Today’s important economic indicators
| Economic Indicators and Events | Japan Time |
|---|---|
| BOJ Monetary Policy Announcement | 11:30 |
| BOJ Policy Rate Decision | 12:00 |
| BOJ Governor Press Conference | 15:30 |
| Policy Rate Announcement | 20:00 |
| Gross Domestic Product (GDP) | 22:30 |
| Initial Jobless Claims | 22:30 |
| Existing Home Sales | 00:00 |
*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.