FED: FOMC Meeting Expectations: Patience Mostly Seen In New Projections (1/4)
We expect that the June meeting communications will reflect an increasingly patient attitude since May and certainly since March’s projections. Our full meeting preview, including analyst expectations, is Here.
- With the Statement in need of only mark-to-market edits, and Chair Powell’s commentary unlikely to be much different from May’s press conference, this patience will be mostly reflected in the new SEP.
- There is a fairly low bar to the 2025 rate median to shift up to show 1 cut instead of March’ 2, and that seems like the most likely outcome.
- Overall despite its patience, the FOMC’s easing bias remains, perhaps aided to some extent by recent inflation data coming in softer than feared. This will be reflected in the 2026-27 dots which will show that the destination remains more or less the same, just with a delay.
- This may mean an awkward message alongside the new economic forecasts, which are likely to show a significant upward revision in near-term inflation which doesn’t quite subside to target by end-2026, alongside an unemployment rate that doesn’t rise significantly.
- Squaring the circle there is the likelihood that participants’ risk assessments for growth and inflation will remain elevated and could even increase further from March’s extremes.
- Put another way, the situation is fluid. In the meantime, the FOMC sees policy as being in a position to react according to developing circumstances.
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AUDUSD TECHS: Trend Needle Points North
- RES 4: 0.5682 High Nov 12 ‘24
- RES 3: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 2: 0.6528 High Nov 29 ‘24
- RES 1: 0.6515 High May 7
- PRICE: 0.6404 @ 19:46 BST May 16
- SUP 1: 0.6354 50-day EMA
- SUP 2: 0.6275 Low Apr 14
- SUP 3: 0.6181 Low Apr 11
- SUP 4: 0.6116 Low Apr 10
The trend condition in AUDUSD is unchanged, it remains bullish and recent weakness is considered corrective. The May 13 rally signals the end of the corrective pullback and attention is on key resistance at 0.6515, the May 7 high. Note that moving average studies remain in a bull-mode position, highlighting an uptrend. A resumption of the trend would open 0.6550, a Fibonacci retracement. Key support to monitor is 0.6354, the 50-day EMA.
EURJPY TECHS: Monitoring Support At The 50-Day EMA
- RES 4: 167.40 61.8% retracement of the Jul 11 - Aug ‘24 sell-off
- RES 3: 166.69 High Oct 31 2024 and a key resistance
- RES 2: 166.10 High Nov 6
- RES 1: 165.21/43 High May 13 / High Nov 8 2024
- PRICE: 162.66 @ 19:43 GMT May 16
- SUP 1: 162.21 50-day EMA
- SUP 2: 161.60 Low May 6
- SUP 3: 160.99 Low Apr 22
- SUP 4: 159.48 Low Apr 9
EURJPY has pulled back from its recent high. The move down is for now, considered corrective. The latest bullish extension paves the way for a climb towards 165.43, the Nov 8 ‘24 high. Moving average studies are in a bull mode position, highlighting a dominant uptrend. Support to watch is 162.21, the 50-day EMA. A break of this level is required to signal a possible reversal. This would open 161.60 initially, the May 6 low.
USDJPY TECHS: Testing Support At The 20-Day EMA
- RES 4: 151.21 High Mar 28 and a key resistance
- RES 3: 150.49 High Apr 2
- RES 2: 149.28 High Apr 3
- RES 1: 148.54/65 76.4% of Mar 28 - Apr 22 bear leg / High May 12
- PRICE: 145.90 @ 19:39 BST May 16
- SUP 1: 144.92 Intraday low
- SUP 2: 142.36 Low May 6
- SUP 3: 141.97 Low Apr 29
- SUP 4: 139.89 Low Apr 22 and a bear trigger
USDJPY has remained below the May 12 high and the pair traded lower, Friday. The latest pullback underpins the view that gains since Apr 22 appear corrective. A stronger reversal lower would refocus attention on 142.36, the May 6 low. First support to watch is 145.16, the 20-day EMA. It has been pierced, a clear break would strengthen a bearish theme. On the upside, key short-term resistance has been defined at 148.65, the May 12 high.
