FOMC Minutes in Focus: USD/JPY and USD/CAD Pull Back from Highs

The US dollar has shifted into a corrective phase following its previous rally, while market participants adopt a wait-and-see approach ahead of the release of the Federal Reserve’s meeting minutes. The weakening of the dollar has already led to a moderate pullback in USD/JPY and USD/CAD from recent highs, reflecting profit-taking and reduced activity ahead of a key event.

An additional factor influencing the market remains geopolitical tensions, which continue to affect global financial flows. Fluctuations in energy prices and persistent escalation risks are limiting the formation of устойчивых trends, increasing the dependence of currency pairs on incoming macroeconomic data.

Today, investor focus will be on the Federal Reserve minutes, which may help clarify the regulator’s stance on the future path of interest rates. The market will assess the tone of policymakers’ comments, particularly the balance between inflation risks and signs of economic slowdown. Depending on the tone, the market may either extend the dollar’s corrective move or revive demand for the US currency.

USD/JPY

Following a test of the key psychological resistance level at 160.00, USD/JPY has formed an “evening star” candlestick pattern. Technical analysis suggests a potential continuation of the downward correction if the pair holds below 159.20. If buyers manage to secure a move above 160.00, a retest of the yearly highs may follow.

Key events for USD/JPY:

• Today at 14:00 (GMT+3): US Mortgage Market Index
• Today at 21:00 (GMT+3): FOMC Minutes
• Today at 21:35 (GMT+3): Speech by Fed’s Christopher Waller

USD/CAD

USD/CAD has formed a “dark cloud cover” pattern after a repeated test of the 1.3950 level. If the pair consolidates below 1.3880, the decline may extend towards 1.3780–1.3800. A break above 1.3970 would invalidate the bearish scenario.

Key events for USD/CAD:

• Today at 13:00 (GMT+3): Canada Leading Economic Index
• Today at 17:30 (GMT+3): US Crude Oil Inventories
• Today at 18:00 (GMT+3): Canada Thomson Reuters/Ipsos PCSI

The market remains in a corrective and anticipatory phase ahead of the release of the FOMC minutes. The current weakening of the dollar may continue if the Fed adopts a softer tone, while more hawkish signals could restore demand for the US currency and limit the extent of the pullback.

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