USD Price Action Setups: FOMC Rate Decision and Inflation Data Loom Large
The US dollar's price action is expected to be influenced by several key factors in the coming days, including the Federal Reserve's interest rate decision and a string of important inflation data releases.
USD/JPY, a currency pair that has been driven by carry trade dynamics for over five years, remains a focal point for FX markets. The Bank of Japan's intervention in 2022, when the pair was trading above 150.00, set a theoretical line in the sand for bulls.
The Fed is expected to hike interest rates by at least 25 basis points at its next meeting, with some analysts predicting more aggressive action. A below-expected US CPI print could potentially shake out longs and trigger a sell-off in USD/JPY, which has been driven by carry trade dynamics since 2022.
In the short term, a hammer or dragonfly doji formation on the daily chart presents a potential counter-trend setup for a bounce. However, sellers may come in at a lower high, inside the 160 level that set resistance a week ago.