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Global markets traded cautiously on Wednesday as investors awaited the release of the Federal Open Market Committee (FOMC) minutes for fresh clues on the Federal Reserve’s policy outlook. The US Dollar held firm, while major currencies such as the Euro, Pound, and Australian Dollar faced renewed selling pressure. Meanwhile, the Japanese Yen weakened further amid persistent policy divergence, and commodity-linked currencies saw limited recovery following earlier losses.
GBP/USD trades weaker near 1.3450, pressured by a firmer US Dollar as traders shift toward safe-haven assets ahead of the FOMC minutes. The pair has struggled to sustain recovery momentum, with investors cautious amid dovish expectations from the Bank of England.
Geopolitical Risks: Heightened Middle East tensions and cautious global risk sentiment continue to weigh on the Pound’s outlook.
US Economic Data: Strong US labor and services data have supported the greenback, limiting Sterling’s upside.
FOMC Outcome: Traders await the minutes for confirmation of potential rate cuts later this year.
Trade Policy: No major trade headlines, but post-Brexit trade dynamics continue to cap GBP strength.
Monetary Policy: The BoE’s cautious tone contrasts with possible Fed easing, leaving GBP vulnerable.
Trend: Bearish below 1.3500.
Resistance: 1.3520 and 1.3575.
Support: 1.3400 and 1.3350.
Forecast: GBP/USD likely to remain under pressure, testing lower supports if FOMC tone stays hawkish.
Market Sentiment: Bearish bias as traders prefer USD exposure.
Catalysts: Upcoming FOMC minutes and BoE commentary later this week.
NZD/USD trades around 0.5820, recovering slightly after steep losses following the Reserve Bank of New Zealand’s cautious tone. The pair’s rebound remains limited as the market awaits further direction from US monetary policy clues.
Geopolitical Risks: Global risk-off sentiment continues to dampen demand for high-yielding assets like the Kiwi.
US Economic Data: Better-than-expected US ISM data reinforces USD strength.
Trade Policy: China’s trade recovery could provide indirect support to the NZD.
Trend: Slightly bearish with limited rebounds.
Forecast: NZD/USD likely to consolidate, with risks tilted to the downside if the USD extends gains.
Market Sentiment: Mixed to bearish.
Catalysts: FOMC minutes release and NZ business confidence data.
EUR/USD trades near 1.1705, struggling to find support as the Dollar remains broadly firm. Downside risks have increased according to UOB Group, reflecting ongoing pressure from divergent policy paths between the Fed and the ECB.
Geopolitical Risks: Ongoing global tensions and energy concerns in Europe weigh on the Euro.
US Economic Data: Stronger-than-expected data continues to back USD demand.
FOMC Outcome: Investors expect modest dovish remarks but not enough to reverse USD strength.
Trend: Bearish bias persists below 1.1750.
Resistance: 1.1740 and 1.1780.
Support: 1.1670 and 1.1630.
Market Sentiment: Bearish.
Catalysts: FOMC minutes and ECB policymakers’ speeches.
AUD/USD trades around 0.6570, extending losses after weak Australian building approvals data. The pair faces continued downside pressure amid strong USD momentum and subdued risk appetite.
Geopolitical Risks: Regional growth concerns and slowing Chinese demand weigh on the Aussie.
US Economic Data: Robust US economic releases sustain USD demand.
FOMC Outcome: A dovish tilt could offer short-term relief for the Aussie.
Trend: Bearish under 0.6600.
Resistance: 0.6605 and 0.6650.
Support: 0.6555 and 0.6520.
Forecast: AUD/USD likely to test lower levels if USD strength persists post-FOMC.
Market Sentiment: Bearish to neutral.
Catalysts: FOMC minutes, RBA’s next policy update.
USD/JPY trades near 151.40, marking a new multi-month high as policy divergence between the BoJ and the Fed widens. The Yen remains heavily offered amid uncertainty surrounding Japan’s fiscal policies and BoJ’s rate outlook.
Geopolitical Risks: Regional tensions and a strong USD continue to weaken JPY demand.
US Economic Data: Positive US figures keep the Dollar supported.
FOMC Outcome: Any hawkish surprise could push USD/JPY to fresh highs.
Trade Policy: Limited direct trade developments impacting JPY.
Trend: Strongly bullish.
Resistance: 151.80 and 152.30.
Support: 150.90 and 150.40.
Forecast: USD/JPY could extend gains if BoJ signals no immediate policy tightening.
Market Sentiment: Bullish.
Catalysts: FOMC minutes, BoJ statements, and US yield movements.
Overall, the cautious sentiment reflected growing uncertainty ahead of key US policy insights, with traders balancing soft global growth signals against expectations of eventual Fed easing. The FOMC minutes could set the tone for upcoming sessions, potentially influencing risk appetite and currency direction heading into the end of the week.
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