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The outcome of the two-day meeting of the American regulator was that officials left the base interest rate unchanged in the range of 5.25-5.5%. Also, from the published statement, it follows that the Fed is ready to adjust the direction of current monetary policy in the event of risks that could hinder the achievement of the regulator's key objectives. Judging by the movement of major currency pairs after the rate decision announcement, market participants are hoping for a prompt change in the Fed's monetary policy. For example, the GBP/USD pair held above significant resistance at 1.2500, and the movement of USD/JPY hints at the possibility of hidden intervention by the Bank of Japan.
GBP/USD
Technical analysis of the GBP/USD pair indicates the possibility of an upward correction towards 1.2700-1.2620, as a "bullish engulfing" pattern has formed on the weekly timeframe. Breaking below recent lows at 1.2300 would invalidate this pattern, potentially leading to a resumption of downward movement towards the range of 1.2100-1.2070. Factors that could influence the pricing of the pair include:
- Data on the UK's Composite Purchasing Managers' Index (PMI) for April, scheduled for release tomorrow at 11:30 (GMT +3:00)
- US Employment Report, scheduled for release tomorrow at 15:30 (GMT +3:00)
USD/JPY
Volatility in the USD/JPY pair continues to remain high after testing the psychological level of 160.00. Yesterday, the pair lost over 400 pips in just a few hours, then immediately recovered some losses by testing 156.20. Such fluctuations may indicate currency interventions by the Bank of Japan, as previously stated by the regulator's officials. Technical analysis of the USD/JPY pair points to a "bearish harami" pattern, which could lead to a test of the important price range of 153.00-152.00. A confident price close above 158.00 could signal a resumption of the long-term upward trend.
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