USDJPY Hits Resistance after Fed Walked Back Williams Dovish Comments

About two hours after Europe closed yesterday, stocks and bonds jumped while yields and the dollar dropped as the market's odds of a 50 basis point rate cut in July spiked to nearly three quarters. This was triggered by New York Fed President John Williams, who dropped the most dovish of hints in a speech. Only, the move lasted just a few moments as a Fed spokesman quickly came out to issue a statement that Williams didn’t intend to suggest that the Fed would be making a large interest rate cut at the FOMC’s upcoming meeting this month. So, down went the probably of a 0.50% rate cut again, to below 50%, which caused the dollar to rebound.

But the USD/JPY, which is stuck inside a short-term bearish channel, has now reached the lower bound of horizontal resistance between 107.70 and 107.90, an area which was formerly support. Thus given the negative sentiment towards the dollar and with safe-haven gold rallying, I wouldn’t be surprised if the USD/JPY resumed lower from here. The first bearish objective would be the liquidity that is now resting below 107.20, with the area below 106.80 being the subsequent objective.

Source: City Index and Trading View

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.