EUR/USD, USD/CAD and USD/JPY Forecasts – Central Banks Dominate Price Action

EUR/USD Technical Analysis

The Euro has pulled back just a bit again against the US dollar in early trading on Wednesday. However, it should be kept in the back of your mind that you do in fact have to be wary of the Federal Reserve interest rate decision coming out later. Now, the interest rate decision itself is not expected to be a change, but people will be watching the press conference and the statement for any tone change or hint as to how dovish or hawkish the Fed may be going forward.

As things stand right now, we are expecting two interest rate cuts this year coming out of the Federal Reserve and that of course is why you’re seeing the US dollar on the back foot in general.

USD/CAD Technical Analysis

The US dollar has initially rallied against the Canadian dollar, but it continues to fall towards that crucial 1.3550 level. This pair is going to be the epicenter of a lot of volatility on Wednesday, as we not only have the Federal Reserve, but we have the Bank of Canada interest rate decision. Again, the Bank of Canada isn’t expected to change anything either.

So, both of these currencies are going to be moving on the idea of rhetoric. This is an area of importance that extends down to 1.35 and then 1.34 that was major support. Even if we break down from here, you’re probably looking at a drop to 1.30 being about as bad as this gets. We are in an area that if Jerome Powell does in fact decide to sound a little non-committal on interest rate cuts, we could see a bounce.

USD/JPY Technical Analysis

The US dollar has rallied slightly against the Japanese yen but it is struggling a bit to hang on to those gains. This, of course, is not a huge driver at the moment, mainly due to the fact that we do have that Federal Reserve interest rate meeting. The 200-day EMA will of course capture a lot of attention but keep in mind there is a lot of speculation out there that the Federal Reserve and the Bank of Japan both intervened in this pair.

So that is part of why we’ve seen this sell-off quite viciously. If this pair could turn around and recapture the 153-yen region, maybe the 153.50-yen region, this would be a classic pullback and bounce play. Again, I think this probably comes down to the press conference after the Federal Reserve decision more than anything else.

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