USD Pairs Forecast – Fed Rate Stance Drives Dip-Buying Across Major FX

USD/JPY Technical Analysis

The US dollar has fallen during early trading on Thursday as traders continue to see a lot of questions asked of the Federal Reserve. At one point, the FedWatch tool suggested there was a 40% chance that the Federal Reserve might actually hike. They did not, and there was a little bit of disappointment as a result.

Nonetheless, since then we’ve seen a bounce here from just above the crucial 162 yen level, and of course we have the 50-day EMA racing towards that. I’m still long of this pair. I don’t care. It’s one that looks very bullish to me. I don’t think it’s the end of the world, and ultimately the interest rate differential remains pretty much the same, so the buyers continue to get paid at the end of every day.

USD/CAD Technical Analysis

The US dollar has gone back and forth against the Canadian dollar, sitting right here at the 50-day EMA, an indicator that a lot of technical analysts use, and sitting just above the 1.40 level. The 1.40 level is a large, round, psychologically significant figure that was part of a previous resistance barrier, so market memory does suggest that there should be something there as far as support. The fact that we just stopped falling and have gone sideways is the sign that perhaps the US dollar could stabilize.

USD/CHF Technical Analysis

The US dollar has been all over the place against the Swiss franc. That’s not a huge surprise. The interest rate differential again is huge for the dollar against the franc. I’ve got no issue holding the dollar against the franc, and in fact plan on doing so for some time. The interest rate differential pays me at the end of every day, and quite frankly, we are right on the precipice of breaking pretty significant resistance from previously trading back there a couple of years ago.

The candlestick itself isn’t too great looking, a little bit of a pullback wouldn’t be a huge surprise, but the underlying interest rate differential and the momentum really hasn’t changed despite the fact that Wednesday was a little rough at the end of the session.

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