USDJPY, GBPUSD, Oil

Fed policy meeting to leave rates on hold; Will USDJPY recover ground?; BoC to cut rates by 25bps; GBPUSD ticks up; OPEC+ speeds up increases; WTI opens with bearish gap

Fed policy meeting --> USDJPY

On Wednesday, the Fed will have its first policy meeting since Trump's 'Liberation Day,' but it won't feature updated economic projections or a new dot plot. Policymakers are expected to maintain their current stance, so the focus will be on the statement and Powell's press conference. Despite recent tariff announcements and market volatility, Fed officials, including Powell, have emphasized that there's no immediate need to change policy. They are waiting for more data to understand the impact of tariffs on the economy, even as Trump pressures them to lower borrowing costs. Some policymakers are more concerned about the inflationary risks posed by tariffs. This suggests the Fed might express more concern about economic growth and hint at rate cuts of slightly more than 50 basis points by December. However, they are unlikely to sound more dovish than the market expects, reinforcing the idea that the Fed operates independently of the President's influence, which could help the dollar regain some lost ground.

USDJPY is challenging the 23.6% Fibonacci retracement level of the down leg from 158.86 to 139.85 at 144.35 after the failure attempt to surpass the 146.00 round number. The price has been trading within a strong negative tendency since the beginning of the year with the next support coming from the 142.00 handle and the seven-month low of 139.85. Even lower, the 200-weekly simple moving average (SMA) at 138.30 would be another tough obstacle. However, a rally beyond the 50-day SMA and the downtrend line may give the green light for the 50.0% Fibonacci at 149.40. 

BoE interest rate decision --> GBPUSD

The Bank of England is expected to lower interest rates to 4.25% on Thursday, easing borrowing costs as it assesses the impact of US tariffs on the economy. Most economists predict a 0.25 percentage point reduction. Economist Sandra Horsfield considers it almost certain that borrowing costs will be further reduced, with financial markets largely anticipating a cut.

At the previous meeting on March 20, policymakers chose not to act and cautioned against assuming imminent cuts, emphasizing a "gradual and careful approach." Since then, GDP data revealed a 0.5% month-on-month growth in February after January's stagnation, raising the annual growth rate to 1.4% from 1.2%. Although inflation slowed in March, it remained above the BoE's 2% target, with core CPI at 3.4%. Additionally, retail sales for March were robust.

GBPUSD is recovering some ground after a bearish doji candle on Friday, confirming a potential upside retracement. The pair is still fluctuating well below the three-year high of 1.3443 and any more advances may send traders toward the February 2022 peak at 1.3635. On the other hand, a slip below the mid-level of the Bollinger band may take the pair to 1.3100. MACD and stochastics lose momentum. 

OPEC+ increase output --> WTI crude oil

Oil prices dropped over $2 per barrel in the Asian trading session on Monday due to OPEC+'s plans to hasten oil output increases. This has raised worries about additional supply entering a market already facing uncertain demand. Sources within OPEC+ indicated that Saudi Arabia is urging the group to speed up the reversal of previous output cuts. This move aims to penalize Iraq and Kazakhstan for not adhering to their production quotas.

WTI crude oil opened with a negative gap today, sending the market to the 55.35 area, slightly above the four-year low of 54.70. Below that, the 61.8% Fibonacci retracement level at 54.00 of the upward wave from the lows in April 2020 at 6.60 to the highs in March 2022 at 130.50 could be another major support level to break. On the flip side, a rise beyond the 20-day SMA at 60.80 could send investors at the immediate resistance of 61.50. The technical oscillators are falling further below their mid-levels. 

規制: CySEC (Cyprus), FSC (Belize), DFSA (UAE), FSCA (South Africa)
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