Forex Today: Fed’s Hawkish Hold Boosts Dollar

After a busy day with the FOMC meeting, another eventful day awaits in the forex today. The Asian session will bring crucial economic data releases from New Zealand, Japan, Australia, and China, which are expected to contribute to heightened volatility. Later in the day, the European Central Bank’s decision and the US Retail Sales and Industrial Production reports will be in focus.

In a widely anticipated move, the Federal Reserve decided to keep interest rates unchanged. However, the central bank’s hawkish tone signaled that rate hikes are not off the table. During the press conference, Chair Powell made it clear that the July meeting would be a “live meeting,” suggesting that policy changes could be on the horizon. Notably, none of the members projected a rate cut by the end of 2023.

Market Reacts: Dollar Strengthens as US Yields Spike and Trim Gains

The market reaction to the Fed’s statement was notable, with US yields initially surging before retracing their gains. The US Dollar gained strength following the decision, recovering some of its recent losses. The DXY index, which measures the dollar against a basket of major currencies, ended the day with a 0.30% loss, marking its lowest close in a month but remaining above its lows.

Prior to the Fed meeting, more US inflation data came in below expectations, with the Producer Price Index (PPI) declining 0.3% in May and the year-on-year rate slowing to 1.1%. Thursday’s US data calendar includes Retail Sales, the Philly Fed Manufacturing Index, Jobless Claims, and Industrial Production. These releases may hold greater influence following the June FOMC meeting.

European Economic Highlights:

Eurozone’s Industrial Production Surpasses Expectations

In Europe, data from Germany revealed a 1.1% drop in the Wholesale Price Index for May, while Industrial Production in the Eurozone expanded by 1% in April, surpassing expectations.

In the currency market, the USD/CHF pair reached its lowest level in four weeks at 0.8963 before retracing above the 0.9000 level. Although the pair is biased towards further losses, support is expected if it remains above 0.9000. Additionally, Switzerland is set to release wholesale inflation data, and the State Secretariat for Economic Affairs will publish economic forecasts.

USD/CHF Pair Faces Consolidation: Technical Analysis Indicates Bearish Trend

Overall, the USD/CHF pair is witnessing a consolidation phase, with technical analysis suggesting a bearish trend. The key support and resistance levels to watch are 0.8950 and 0.9090, respectively. The broader trend for the day remains bearish, according to analysts.

The Ichimoku Cloud analysis for USD/CHF rate indicates a downtrend, with the pair trading below the Ichimoku Cloud. A test of the upper border of the cloud at 0.9065 is expected, followed by a decline towards 0.8865. A breakout above the upper border of the cloud would signal a shift in the bearish trend, potentially leading to a rise toward 0.9205.

Forex Today: Risk Sentiment and US Economic Data

As the trading day progresses, the USD/CHF pair faces some resistance due to the US Dollar’s pullback from intraday gains. The Federal Reserve’s hawkish stance continues to support the forex today and could provide a boost to the pair. However, the safe-haven status of the Swiss Franc, along with concerns about a global economic slowdown, may limit the upside potential. Traders will closely monitor the US economic data releases and overall market sentiment for further trading opportunities.

In summary, in the forex market today, the Federal Reserve’s hawkish hold has strengthened the US Dollar. At the same time, Asian session data releases and the European Central Bank’s decision remain critical focal points for the day. The USD/CHF pair has seen some recovery but continues to face resistance, with technical analysis suggesting a bearish trend. Market participants await upcoming US economic data and monitor risk sentiment for trading cues.

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