USD/JPY and USD/CHF at Pivotal Levels as Fed Stance…

The US dollar is maintaining its upward momentum in the wake of the Federal Reserve meeting, supported by a relatively hawkish tone from policymakers and remarks by Jerome Powell. Investors are interpreting the Fed’s messaging as an indication that tight monetary conditions may persist for an extended period, reinforcing Treasury yields and sustaining demand for the greenback.

At the same time, attention is turning to forthcoming US economic data, which could provide confirmation of the prevailing trend. Market participants remain measured in their positioning, weighing inflation prospects and the broader economic outlook. This cautious approach is keeping the dollar close to its recent peaks while leaving room for further directional movement.

USD/JPY

USD/JPY has reached its highest level of the year, highlighting the ongoing strength of the US currency in the current environment. The rally is largely driven by policy divergence, with the Federal Reserve maintaining a restrictive bias while the Bank of Japan continues its accommodative stance.

Looking ahead, two near-term scenarios stand out. Should confidence in the US economy hold and the Fed refrain from signalling any policy easing, the pair could push higher towards the 2024 highs around 162.00. Alternatively, profit-taking and a degree of caution ahead of key data releases may prompt a pullback, with prices potentially returning to the 159.60–160.00 area.

Key events for USD/JPY:

• today at 15:30 (GMT+3): US gross domestic product;
• today at 15:30 (GMT+3): US core PCE price index;
• tomorrow at 02:30 (GMT+3): Tokyo core CPI (Japan).

USD/CHF

USD/CHF is attempting a recovery after its prior decline, benefiting from renewed dollar strength. From a technical standpoint, the pair has formed a V-shaped reversal pattern on the daily chart, pointing to a possible move towards the 0.7940–0.7960 range. However, a sustained break below 0.7900 would increase the likelihood of a renewed downward move.

Key events for USD/CHF:

• today at 10:00 (GMT+3): Switzerland’s KOF leading indicator;
• today at 17:00 (GMT+3): Atlanta Fed GDPNow estimate;
• today at 23:30 (GMT+3): Federal Reserve balance sheet data.

In summary, the dollar continues to trade with a firm tone, though its next move will depend on the interplay between Fed guidance and incoming macroeconomic figures. Markets are weighing both the prospect of continued appreciation and the risk of a short-term pullback, with upcoming data likely to determine which scenario prevails.

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