Dollar Declines Following Fed Rate Decision

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The recent rally of the U.S. dollar, observed during the U.S. election results, has slightly slowed after yesterday's Federal Reserve meeting. As anticipated by analysts, the Fed lowered the base interest rate by 25 basis points, from 5.00% to 4.75%. In their accompanying statement, Fed officials highlighted robust economic activity and improvements in labour market conditions. Following these comments, the dollar initially declined but attempted to recover its lost ground a few hours after the Fed meeting.

USD/JPY

Technical analysis of the USD/JPY pair suggests the possibility of a deeper downward correction, as a "bearish harami" pattern has formed on the daily timeframe. The initial target range for this retracement is 152.70–152.00. If the price consolidates below 152.00, the pair may test recent lows in the 151.30–150.00 range. However, a return to upward movement could occur if the price confidently re-establishes itself above 154.80.

Key events influencing USD/JPY pricing include:

  • 18:00 (GMT +3:00): U.S. 5-year inflation expectations from the University of Michigan
  • 19:00 (GMT +3:00): Speech by FOMC member Michelle Bowman
  • 20:00 (GMT +3:00): USDA report on supply and demand estimates

USD/CAD

Despite recent positive news for the dollar, USD/CAD has struggled to break the key resistance range of 1.3980–1.3960. Over the week, the price has twice tested this resistance, with potential for sellers to form a "double top" pattern if there’s a strong reversal. This scenario, however, would only become actionable if the pair consolidates below 1.3820. Positive U.S. news could drive another attempt at the 1.3980 level.

Key events influencing USD/CAD pricing include:

  • 16:30 (GMT +3:00): Release of Canada’s unemployment rate
  • 16:30 (GMT +3:00): Report on Canada’s average hourly wages for permanent employees in October