The U.S. dollar maintained its strength against most major currencies ahead of the latest Federal Reserve meeting. Although the baseline expectation is for rates to remain unchanged, markets are also factoring in the possibility of a hike. The Fed’s decision and its commentary on inflation, economic conditions, and the future path of monetary policy will likely shape the dollar’s trajectory in the coming weeks.
Geopolitical tensions in the Middle East also bolster the dollar, as investors seek safe‑haven assets amid uncertainties despite a temporary pause in U.S. strikes on Iran and renewed diplomatic activity. The prospect of further escalation keeps demand for the dollar elevated. Meanwhile, USD/JPY’s climb toward multi‑year highs has sparked expectations of possible interventions by Japanese authorities, raising intervention risk. For USD/CAD, subdued crude prices continue to weigh on the Canadian dollar, supporting the pair’s upward bias.
USD/JPY
USD/JPY reached another multi‑year high near 164.00 last week. After a pronounced rally, the pair has entered a modest pullback. Should the Federal Reserve adopt a more hawkish stance or maintain its current tone, the pair may resume its advance toward 165.00–165.50. Conversely, a decisive break below 163.30 could precipitate a deeper correction toward the 162.00–162.60 support zone.
Key events for USD/JPY:
- Today at 21:00 (GMT+3): US Federal Reserve interest rate decision;
- Today at 21:30 (GMT+3): Federal Open Market Committee (FOMC) press conference;
- Tomorrow at 15:30 (GMT+3): US Core Personal Consumption Expenditures (PCE) Price Index.
USD/CAD
USD/CAD’s rebound after forming a bullish engulfing pattern stalled near resistance at 1.4130. The pair is currently consolidating within the 1.4060–1.4130 range. A decisive break above the upper boundary could pave the way for further gains toward 1.4160–1.4200, while a drop below 1.4060 may trigger a retest of the recent low around 1.4000.
Key events for USD/CAD:
- Today at 17:30 (GMT+3): US crude oil inventories;
- Today at 20:30 (GMT+3): Bank of Canada Summary of Deliberations;
- Tomorrow at 15:30 (GMT+3): US GDP data.
Looking ahead, the near‑term outlook for both USD/JPY and USD/CAD hinges mainly on the Federal Reserve’s decision and its guidance on future interest‑rate movements. A more hawkish stance could underpin a breakout above key resistance levels and reinforce the dollar’s strength, whereas a dovish tone may provoke a correction in the greenback, especially against the yen, where multi‑year highs heighten the risk of official warnings. For USD/CAD, oil price dynamics and the Bank of Canada’s summary of deliberations will continue to be significant drivers.
