CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% 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.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% 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.

U.S. Dollar Rallies on Fed Statement, Pulls Back on Presser

Article By: ,  Sr. Strategist

 

U.S. Dollar Talking Points:

 

  • The U.S. Dollar is up slightly from before the FOMC meeting, despite a seeming lack of detail in any specific regard.
  • Fed Chair Jerome Powell was very evasive during the press conference, dodging a number of questions pertaining to politics and even cryptocurrencies while offering little of note regrading future policy parameters.
  • The initial move after the Fed statement was USD strength and equity weakness as the Fed removed a phrase from the statement pertaining to inflation being on its way to the 2% goal. This seemed to initially be read as a hawkish development, but in the first ten minutes of the press conference was talked-down by Powell as he said no signaling was designed by the change as it was merely cleaning up the verbiage in the Fed’s announcement. That’s around when stocks began to rally and the U.S. Dollar erased the prior FOMC-fueled bounce.

From the daily chart today’s FOMC meeting was a relative non-event. Of course, this wasn’t expected to be a meeting filled with new developments as it’s not a quarterly meeting and the FOMC wasn’t expected to adjust rates. Powell, by and large, was in a position to evade and that’s precisely what he did, as there was little reason to tip markets in one direction or the other after three consecutive meetings with rate cuts.

On top of that there’s a flurry of economic data ahead with tomorrow’s ECB rate decision, where the bank is expected to cut, and then the Tokyo inflation data set for tomorrow night. This is followed by the Core PCE data on Friday morning which will give markets the next glimpse at U.S. inflation progress and this, when all is said and done, may end up being the biggest driver for the USD over the week. Stocks could be volatile on that, as well, but on that note, we’re getting some large corporate earnings reports with the market bellwether of Apple expected to announce quarterly results tomorrow after the bell.

At this point, the U.S. Dollar is very near the same levels from earlier in the session but the longer-term context here is a bit more interesting, which I’ll get into after the next chart.

 

U.S. Dollar 30-Minute Chart

Chart prepared by James Stanley; data derived from Tradingview

 

Monday Equity Sell-Off as USD/JPY Breaks

 

The weekly open looked nasty, at least initially, as equities were driven-lower and headlines abound about the ‘AI bubble bursting.’

While I don’t doubt that the DeepSeek news had something to do with the sell-off, it seemed illogical to ascribe the entire move to a fragile report of a competitor in the AI space.

Interestingly, that sell-off in stocks also showed alongside another possible risk factor and this one didn’t seem to get much attention, as both the U.S. Dollar and USD/JPY were selling-off. I talked about this in the Monday article, highlighting the potential of carry trade unwind, very similar to the driver that showed in Q3 of last year and ran aggressively until the morning of August 5th, when stocks finally bottomed following a flare in VIX to its third-highest level ever.

Later in Q3 and through Q4, that theme cooled and as U.S. Dollar strength came back, so did USD/JPY.

But last week marked the second rate hike from the Bank of Japan and inflation in Japan has been notably elevated, which may inspire even more hawkish moves down-the-road.

I looked at this in the Tuesday webinar but the carry trade is essentially a driver of leverage, as funds and banks can borrow in Japan at ultra low rates, and then invest that capital elsewhere with aim of pocketing the spread between rate differentials. This, in essence, allows cheap capital to flow into risker aspects of the market, so when we see carry trades unwinding, such as we saw last summer after the July 11th CPI report, that could quickly remove capital from a lot of pockets of the economy, such as tech stocks, or AI stocks.

This is a risk that has not been completely obviated yet, even if the DeepSeek news seems less threatening a few days later.

As stocks bounced on Monday and continued to rally through Tuesday, USD/JPY recovered a bit. So far today the 155.00 level has held as support, but this isn’t a bullish picture yet, as resistance had held at a lower-high and from the trendline projection taken from the high three weeks ago.

As I’ve been saying in videos, it’s the 150-151.95 zone that’s of interest for bigger picture themes and if sellers can slip price below that, larger problems may be ahead with a global de-leveraging event. For shorter-term structure, the 153.41-153.75 zone remains key support, and next resistance is the 156.67 Fibonacci level sitting overhead that caught the highs last week.

 

USD/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

--- written by James Stanley, Senior Strategist

 

 

 

 

U.S. Dollar Rallies on Fed Statement, Pulls Back on the Presser

It’s a busy week across macro markets and we’re just getting started after the FOMC. Tomorrow’s ECB meeting is expected to see a cut but the bigger item may be around Japan and USD/JPY.

U.S. Dollar Talking Points:

-          The U.S. Dollar is up slightly from before the FOMC meeting, despite a seeming lack of detail in any specific regard.

-          Fed Chair Jerome Powell was very evasive during the press conference, dodging a number of questions pertaining to politics and even cryptocurrencies while offering little of note regrading future policy parameters.

-          The initial move after the Fed statement was USD strength and equity weakness as the Fed removed a phrase from the statement pertaining to inflation being on its way to the 2% goal. This seemed to initially be read as a hawkish development, but in the first ten minutes of the press conference was talked-down by Powell as he said no signaling was designed by the change as it was merely cleaning up the verbiage in the Fed’s announcement. That’s around when stocks began to rally and the U.S. Dollar erased the prior FOMC-fueled bounce.

Indices Forecast

From the daily chart today’s FOMC meeting was a relative non-event. Of course, this wasn’t expected to be a meeting filled with new developments as it’s not a quarterly meeting and the FOMC wasn’t expected to adjust rates. Powell, by and large, was in a position to evade and that’s precisely what he did, as there was little reason to tip markets in one direction or the other after three consecutive meetings with rate cuts.

On top of that there’s a flurry of economic data ahead with tomorrow’s ECB rate decision, where the bank is expected to cut, and then the Tokyo inflation data set for tomorrow night. This is followed by the Core PCE data on Friday morning which will give markets the next glimpse at U.S. inflation progress and this, when all is said and done, may end up being the biggest driver for the USD over the week. Stocks could be volatile on that, as well, but on that note, we’re getting some large corporate earnings reports with the market bellwether of Apple expected to announce quarterly results tomorrow after the bell.

At this point, the U.S. Dollar is very near the same levels from earlier in the session but the longer-term context here is a bit more interesting, which I’ll get into after the next chart.

U.S. Dollar 30-Minute Chart

Chart prepared by James Stanley; data derived from Tradingview

Monday Equity Sell-Off as USD Tests Support

The weekly open looked nasty, at least initially, as equities were driven-lower and headlines abound about the ‘AI bubble bursting.’

While I don’t doubt that the DeepSeek news had something to do with the sell-off, it seemed illogical to ascribe the entire move to a fragile report of a competitor in the AI space.

Interestingly, that sell-off in stocks also showed alongside another possible risk factor and this one didn’t seem to get much attention, as both the U.S. Dollar and USD/JPY were selling-off. I talked about this in the Monday article, highlighting the potential of carry trade unwind, very similar to the driver that showed in Q3 of last year and ran aggressively until the morning of August 5th, when stocks finally bottomed following a flare in VIX to its third-highest level ever.

Later in Q3 and through Q4, that theme cooled and as U.S. Dollar strength came back, so did USD/JPY.

But last week marked the second rate hike from the Bank of Japan and inflation in Japan has been notably elevated, which may inspire even more hawkish moves down-the-road.

I looked at this in the Tuesday webinar but the carry trade is essentially a driver of leverage, as funds and banks can borrow in Japan at ultra low rates, and then invest that capital elsewhere with aim of pocketing the spread between rate differentials. This, in essence, allows cheap capital to flow into risker aspects of the market, so when we see carry trades unwinding, such as we saw last summer after the July 11th CPI report, that could quickly remove capital from a lot of pockets of the economy, such as tech stocks, or AI stocks.

This is a risk that has not been completely obviated yet, even if the DeepSeek news seems less threatening a few days later.

As stocks bounced on Monday and continued to rally through Tuesday, USD/JPY recovered a bit. So far today the 155.00 level has held as support, but this isn’t a bullish picture yet, as resistance had held at a lower-high and from the trendline projection taken from the high three weeks ago.

As I’ve been saying in videos, it’s the 150-151.95 zone that’s of interest for bigger picture themes and if sellers can slip price below that, larger problems may be ahead with a global de-leveraging event. For shorter-term structure, the 153.41-153.75 zone remains key support, and next resistance is the 156.67 Fibonacci level sitting overhead that caught the highs last week.

USD/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist

U.S. Dollar Talking Points:

 

  • The U.S. Dollar is up slightly from before the FOMC meeting, despite a seeming lack of detail in any specific regard.
  • Fed Chair Jerome Powell was very evasive during the press conference, dodging a number of questions pertaining to politics and even cryptocurrencies while offering little of note regrading future policy parameters.
  • The initial move after the Fed statement was USD strength and equity weakness as the Fed removed a phrase from the statement pertaining to inflation being on its way to the 2% goal. This seemed to initially be read as a hawkish development, but in the first ten minutes of the press conference was talked-down by Powell as he said no signaling was designed by the change as it was merely cleaning up the verbiage in the Fed’s announcement. That’s around when stocks began to rally and the U.S. Dollar erased the prior FOMC-fueled bounce.

 

Indices Forecast

 

From the daily chart today’s FOMC meeting was a relative non-event. Of course, this wasn’t expected to be a meeting filled with new developments as it’s not a quarterly meeting and the FOMC wasn’t expected to adjust rates. Powell, by and large, was in a position to evade and that’s precisely what he did, as there was little reason to tip markets in one direction or the other after three consecutive meetings with rate cuts.

On top of that there’s a flurry of economic data ahead with tomorrow’s ECB rate decision, where the bank is expected to cut, and then the Tokyo inflation data set for tomorrow night. This is followed by the Core PCE data on Friday morning which will give markets the next glimpse at U.S. inflation progress and this, when all is said and done, may end up being the biggest driver for the USD over the week. Stocks could be volatile on that, as well, but on that note, we’re getting some large corporate earnings reports with the market bellwether of Apple expected to announce quarterly results tomorrow after the bell.

At this point, the U.S. Dollar is very near the same levels from earlier in the session but the longer-term context here is a bit more interesting, which I’ll get into after the next chart.

 

U.S. Dollar 30-Minute Chart

Chart prepared by James Stanley; data derived from Tradingview

 

Monday Equity Sell-Off as USD/JPY Breaks

 

The weekly open looked nasty, at least initially, as equities were driven-lower and headlines abound about the ‘AI bubble bursting.’

While I don’t doubt that the DeepSeek news had something to do with the sell-off, it seemed illogical to ascribe the entire move to a fragile report of a competitor in the AI space.

Interestingly, that sell-off in stocks also showed alongside another possible risk factor and this one didn’t seem to get much attention, as both the U.S. Dollar and USD/JPY were selling-off. I talked about this in the Monday article, highlighting the potential of carry trade unwind, very similar to the driver that showed in Q3 of last year and ran aggressively until the morning of August 5th, when stocks finally bottomed following a flare in VIX to its third-highest level ever.

Later in Q3 and through Q4, that theme cooled and as U.S. Dollar strength came back, so did USD/JPY.

But last week marked the second rate hike from the Bank of Japan and inflation in Japan has been notably elevated, which may inspire even more hawkish moves down-the-road.

I looked at this in the Tuesday webinar but the carry trade is essentially a driver of leverage, as funds and banks can borrow in Japan at ultra low rates, and then invest that capital elsewhere with aim of pocketing the spread between rate differentials. This, in essence, allows cheap capital to flow into risker aspects of the market, so when we see carry trades unwinding, such as we saw last summer after the July 11th CPI report, that could quickly remove capital from a lot of pockets of the economy, such as tech stocks, or AI stocks.

This is a risk that has not been completely obviated yet, even if the DeepSeek news seems less threatening a few days later.

As stocks bounced on Monday and continued to rally through Tuesday, USD/JPY recovered a bit. So far today the 155.00 level has held as support, but this isn’t a bullish picture yet, as resistance had held at a lower-high and from the trendline projection taken from the high three weeks ago.

As I’ve been saying in videos, it’s the 150-151.95 zone that’s of interest for bigger picture themes and if sellers can slip price below that, larger problems may be ahead with a global de-leveraging event. For shorter-term structure, the 153.41-153.75 zone remains key support, and next resistance is the 156.67 Fibonacci level sitting overhead that caught the highs last week.

 

USD/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

--- written by James Stanley, Senior Strategist

 

 

 

 

U.S. Dollar Rallies on Fed Statement, Pulls Back on the Presser

It’s a busy week across macro markets and we’re just getting started after the FOMC. Tomorrow’s ECB meeting is expected to see a cut but the bigger item may be around Japan and USD/JPY.

U.S. Dollar Talking Points:

-          The U.S. Dollar is up slightly from before the FOMC meeting, despite a seeming lack of detail in any specific regard.

-          Fed Chair Jerome Powell was very evasive during the press conference, dodging a number of questions pertaining to politics and even cryptocurrencies while offering little of note regrading future policy parameters.

-          The initial move after the Fed statement was USD strength and equity weakness as the Fed removed a phrase from the statement pertaining to inflation being on its way to the 2% goal. This seemed to initially be read as a hawkish development, but in the first ten minutes of the press conference was talked-down by Powell as he said no signaling was designed by the change as it was merely cleaning up the verbiage in the Fed’s announcement. That’s around when stocks began to rally and the U.S. Dollar erased the prior FOMC-fueled bounce.

Indices Forecast

From the daily chart today’s FOMC meeting was a relative non-event. Of course, this wasn’t expected to be a meeting filled with new developments as it’s not a quarterly meeting and the FOMC wasn’t expected to adjust rates. Powell, by and large, was in a position to evade and that’s precisely what he did, as there was little reason to tip markets in one direction or the other after three consecutive meetings with rate cuts.

On top of that there’s a flurry of economic data ahead with tomorrow’s ECB rate decision, where the bank is expected to cut, and then the Tokyo inflation data set for tomorrow night. This is followed by the Core PCE data on Friday morning which will give markets the next glimpse at U.S. inflation progress and this, when all is said and done, may end up being the biggest driver for the USD over the week. Stocks could be volatile on that, as well, but on that note, we’re getting some large corporate earnings reports with the market bellwether of Apple expected to announce quarterly results tomorrow after the bell.

At this point, the U.S. Dollar is very near the same levels from earlier in the session but the longer-term context here is a bit more interesting, which I’ll get into after the next chart.

U.S. Dollar 30-Minute Chart

Chart prepared by James Stanley; data derived from Tradingview

Monday Equity Sell-Off as USD Tests Support

The weekly open looked nasty, at least initially, as equities were driven-lower and headlines abound about the ‘AI bubble bursting.’

While I don’t doubt that the DeepSeek news had something to do with the sell-off, it seemed illogical to ascribe the entire move to a fragile report of a competitor in the AI space.

Interestingly, that sell-off in stocks also showed alongside another possible risk factor and this one didn’t seem to get much attention, as both the U.S. Dollar and USD/JPY were selling-off. I talked about this in the Monday article, highlighting the potential of carry trade unwind, very similar to the driver that showed in Q3 of last year and ran aggressively until the morning of August 5th, when stocks finally bottomed following a flare in VIX to its third-highest level ever.

Later in Q3 and through Q4, that theme cooled and as U.S. Dollar strength came back, so did USD/JPY.

But last week marked the second rate hike from the Bank of Japan and inflation in Japan has been notably elevated, which may inspire even more hawkish moves down-the-road.

I looked at this in the Tuesday webinar but the carry trade is essentially a driver of leverage, as funds and banks can borrow in Japan at ultra low rates, and then invest that capital elsewhere with aim of pocketing the spread between rate differentials. This, in essence, allows cheap capital to flow into risker aspects of the market, so when we see carry trades unwinding, such as we saw last summer after the July 11th CPI report, that could quickly remove capital from a lot of pockets of the economy, such as tech stocks, or AI stocks.

This is a risk that has not been completely obviated yet, even if the DeepSeek news seems less threatening a few days later.

As stocks bounced on Monday and continued to rally through Tuesday, USD/JPY recovered a bit. So far today the 155.00 level has held as support, but this isn’t a bullish picture yet, as resistance had held at a lower-high and from the trendline projection taken from the high three weeks ago.

As I’ve been saying in videos, it’s the 150-151.95 zone that’s of interest for bigger picture themes and if sellers can slip price below that, larger problems may be ahead with a global de-leveraging event. For shorter-term structure, the 153.41-153.75 zone remains key support, and next resistance is the 156.67 Fibonacci level sitting overhead that caught the highs last week.

USD/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist

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