News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • The BOC's rate decision today proved as hawkish as forecasts insinuate. Most interesting pair for this was $GBPCAD where it is hawkish expectation vs hawkish expectation https://t.co/yh3fDNYiKZ
  • WTI continues to retreat, down over 2.5% on the day and currently trading just north of $82 $CL_F https://t.co/GmtrXNH1Hf
  • USD strength present throughout the NY session, but the US Dollar Index continues to find stiff resistance at the 94 level $USD $DXY https://t.co/nZFjtFbG4O
  • Euro is down more than 0.2% against the US Dollar since the start of the week with EUR/USD trading just above support heading into the European Central Bank interest rate decision tomorrow. Get your $EURUSD market update from @MBForex here:https://t.co/a9tikztYFj https://t.co/uztfGSoYvW
  • Nasdaq 100 is not sure whether it wants to close at a record high, but the NDX-SPX ratio has jumped sharply today on the tech index's 0.9% rally https://t.co/fUMvv9mtZ8
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Gold: 0.33% Silver: 0.05% Oil - US Crude: -0.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/1qRqMHuB6V
  • The recent AUD/JPY rally appears to be stalling below 86.000, with the pair relatively flat on the session $AUDJPY https://t.co/xfNKmmhJdq
  • #Euro Technical Forecast: $EURUSD Pressured into #ECB- Breakout Levels - https://t.co/RG2nfQrqsF https://t.co/ceYY2Dk1Eo
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 90.05%, while traders in USD/JPY are at opposite extremes with 73.98%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/j6NdfK7lpf
  • A day full of meetings and I've always had one eye fixed on this $GOOG rally. Last nights afterhours reticence didn't do this stock (and MSFT) justice. Impressive https://t.co/tEwaqSt5lm
Forex: USD Outlook Propped Up By Less-Dovish Fed, All Eyes on BoJ

Forex: USD Outlook Propped Up By Less-Dovish Fed, All Eyes on BoJ

David Song, Strategist

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10137.56

10148.05

10117.7

-0.03

69.10%

Forex_USD_Outlook_Propped_Up_By_Less-Dovish_Fed_All_Eyes_on_BoJ_body_ScreenShot122.png, Forex: USD Outlook Propped Up By Less-Dovish Fed, All Eyes on BoJ

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) appears to be firming up during the North American session as it now trades 0.03 percent lower from the open, but the rebound from the daily low (10,117) may be short-lived as the greenback approaches trendline resistance. At the same time, with the 30-minute relative strength index quickly approaching overbought territory, the index looks poised for a more meaningful correction to the downside, and we the 10,050 region come back into play as it holds up as interim support. Nevertheless, we will preserve our bullish bias for the dollar as it maintains the upward trend carried over from the previous year, and we may see the reserve currency gain ground going into the FOMC interest rate decision on January 30 as the central bank drops its dovish tone for monetary policy.

Forex_USD_Outlook_Propped_Up_By_Less-Dovish_Fed_All_Eyes_on_BoJ_body_ScreenShot123.png, Forex: USD Outlook Propped Up By Less-Dovish Fed, All Eyes on BoJ

Indeed, Dallas Fed President Richard Fisher held an improved outlook for the world’s largest economy as he sees ‘GDP growth of 3 percent this year,’ while St. Louis Fed President Jeffrey Lacker argued that the central bank should ‘stop printing money as soon as possible’ as it raises the longer-term outlook for inflation. Mr. Lacker warned that the Fed may fall behind on its price stability mandate as the risks to quantitative easing outweighs the benefits, and we may see a growing number of central bank officials scale back their willingness to expand the balance sheet further as the economic recovery gradually gathers pace. With the index falling back from the upper bounds of the ascending channel, the pullback in the relative strength index foreshadows a more meaningful correction in the days ahead, and we will look for further advances in the USD amid the shift in the policy outlook.

Forex_USD_Outlook_Propped_Up_By_Less-Dovish_Fed_All_Eyes_on_BoJ_body_ScreenShot193.png, Forex: USD Outlook Propped Up By Less-Dovish Fed, All Eyes on BoJ

Two of the four components advanced against the greenback, led by a 0.36 percent rally in the Japanese Yen, and the low-yielding currency may continue to gain ground over the coming days should the Bank of Japan (BoJ) take a greater stance in preserving its independence. Although there’s speculation that the BoJ will raise its price growth target following the two-day meeting, the central bank may adopt a target band for inflation rather than a specific figure, and we may see Governor Masaaki Shirakawa continue to speak out against an unlimited asset-purchasing program as the government tries to have a greater influence over monetary policy. In turn, we may see the USDJPY carve out a near-term top around the 90.00 figure, and we may finally see a correction pan out in the days ahead should the BoJ interest rate decision fall short of market expectations.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

New to FX? Watch this Video

Join us to discuss the outlook for the major currencies on the DailyFXForums

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES