Yen Stimulates By Hawkish BoJ Meeting Minutes

* Downbeat earnings reports from Mega-cap companies drag US index

* Australia’s CPI came short, weighed on the Australian dollar.

* Dollar traded flat ahead of the FOMC Meeting.

Fundamental Overview

The Japanese Yen gained strength following the release of the Bank of Japan (BoJ) meeting minutes, where discussions about the potential end of the negative rate policy were noted. Some board members suggested that current conditions present a “golden” opportunity for the Japanese central bank to shift its monetary policy. 

In the United States, the dollar exhibited sideways movement as traders eagerly awaited the highly anticipated Federal Open Market Committee (FOMC) meeting minutes for insights into the dollar’s strength.

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Current rate hike bets on 31 January Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (98%) VS -25 bps (2%)  

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Economic Calendar

(MT4 System Time)

Source: MQL5  

Market Movements

DOLLAR_INDX, H4

Ahead of the Federal Reserve’s impending policy decisions, the Dollar Index maintains stability, with investors closely watching for cues from Fed Chairman Jerome Powell on the prospects of a March rate cut. Recent positive economic data has tempered expectations, as reflected in the CME FedWatch Tool, where the probability of a March rate cut has dropped from 89% to 42% in the past month. 

The Dollar Index is currently trading lower after a retracement from resistance, marked by a bearish momentum signalled by the MACD and an RSI of 48, indicating potential further losses. These technical insights provide a snapshot of the Dollar Index’s trajectory amid evolving monetary policy expectations.

Resistance level: 103.90, 104.65

Support level: 103.15, 102.20

GOLD，H4

Amidst uncertainty preceding the FOMC meeting, the gold market exhibits a muted stance, hovering around a pivotal resistance level. Anticipations of a steady interest rate by the Fed, driven by positive economic data, have not dampened the overarching bullish trend for gold. Geopolitical tensions in the Middle East coupled with gold’s intrinsic safe-haven allure continue to underpin investor confidence in the precious metal. 

Despite the current flatness in gold prices as they test the resistance level, technical indicators signal potential upward movement. The MACD reflects mounting bullish momentum, and with the RSI at 59—holding above the midline—there is an indication that gold might extend its gains post-breakout.

Resistance level: 2035.00, 2055.00

Support level: 2019.00,  1985.00

USD/JPY, H4

The USD/JPY pair displays low volatility and a sideways trend as investors await the Federal Reserve’s interest rate decision. Despite discussions within the Bank of Japan about a potential shift in monetary policy, including the consideration of raising interest rates, the pair remains at elevated levels with minimal impact.

 USD/JPY remained flat and might continue to consolidate in a range since the RSI near the 50-level and the MACD close to zero, both indicating a neutral market outlook. As the market monitors central bank decisions, the USD/JPY pair stands poised for potential developments, providing insights into evolving dynamics.

Resistance level: 148.67, 151.76

Support level: 146.76, 145.21