FX Analysis – USD dips on dovish Powell, JPY continues lower after BoJ

USD was notably lower after what was seen as a dovish FOMC meeting on Wednesday. The Fed 2024 median dot was left unchanged with 3 cuts for 2024 still the Fed forecast but the dovish part came at the presser where Fed Chair Powell downplayed the hot January and February CPI numbers. This dovish tilt saw risk assets surge and the USD dump.

USDJPY bucked the weak Dollar trend pushing up to 152 before the result from the FOMC saw it pare some of those gains. A hawkish BoJ source reporting in Nikkei that suggested another hike could come in July or October also supporting the Yen somewhat. There is also speculation if the Yen weakness were to continue the BoJ/MoF could step in to intervene, with ING noting that local accounts felt that 155 would be red line.

Gold ripped to all time highs, with XAUUSD hitting a high of 2222 USD an ounce on the back of USD weakness and falling yields post FOMC, before falling back just above the old high at 2195 heading into the APAC session.

Today ahead, more Central Bank action out of the BoE and SNB for FX traders to look forward to.