FOMC Minutes Support the Dollar: Yen and Canadian Dollar Retreat

The dollar strengthened following the release of the minutes from the Federal Open Market Committee, reflecting the regulator’s more hawkish tone. In the document, policymakers highlighted persistent inflationary risks and the need for a cautious approach to any potential policy easing. This reduced expectations of imminent rate cuts and supported demand for the US currency.

At the same time, the market remains focused on upcoming US macroeconomic releases due before the end of the week. Attention is centred on the Philadelphia Fed Manufacturing Index, initial jobless claims, trade data, and housing market statistics. These releases could either reinforce the impact of the minutes or partially offset it if the figures come in weaker than expected.

Overall, the dollar has rebounded from support levels after the publication of the minutes. However, the further development of the upward correction in USD/JPY and USD/CAD will depend on incoming data. Market sentiment remains neutral-analytical, as participants assess whether the data will confirm the resilience of the US economy or trigger a deeper dollar correction.

USD/JPY

After testing the support zone near the January lows, USD/JPY has moved into an upward corrective phase. Technical analysis points to the potential for gains towards 155.80–156.30, as a bullish engulfing pattern has formed on the daily timeframe. The upside scenario would be invalidated by a sustained move below 154.00.

Key events for USD/JPY:

• today at 15:20 (GMT+2): speech by FOMC member Bostic;
• today at 15:30 (GMT+2): Philadelphia Fed Manufacturing Index (US);
• today at 15:30 (GMT+2): US initial jobless claims.

USD/CAD

USD/CAD has also rebounded from the January lows and formed a bullish reversal pattern. The pair is currently approaching the key resistance level at 1.3700. If buyers manage to secure a firm break above this level in the coming sessions, further gains towards 1.3730–1.3800 are possible. Conversely, a move below 1.3630–1.3590 could open the way for a retest of the 1.3500 area.

Key events for USD/CAD:

• today at 15:30 (GMT+2): Canada’s trade balance;
• today at 17:30 (GMT+2): Canadian export data;
• today at 19:00 (GMT+2): US crude oil inventories.

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