Today’s Central Bank Policy panel discussion at the ECB’s annual forum in Sintra, Portugal, could provide very unique trading opportunities as some of the biggest central bank heads sit down together at the same time. Longer-term FX traders will be looking for interest rate differential updates, and any changes in recent rhetoric could lead to some great trading opportunities on the day, especially if we get a ‘perfect storm’ moment when one side of the equation turns more hawkish while the other becomes more dovish.
The ECB President, Christine Lagarde, hosts the event, and with the Fed Chair, Jerome Powell, the Bank of England’s Andrew Bailey, and the Bank of Japan’s Kazuo Ueda all in attendance, the propensity for FX opportunities is high. The biggest opportunity probably comes for USDJPY, with the possibility for Ueda to strike a more hawkish pose while the market (and President Trump) is keenly looking for Jerome Powell to signal the next cut from the Fed.
USDJPY has pulled back strongly over the last week after it spiked on the Middle East conflict, and if we see a change in the forward guidance from either central bank, with the Fed becoming more dovish or the Bank of Japan more hawkish — and the outside chance from both — then we could see a strong move further south in the next few sessions. Initial support is around 141.50 on the daily chart, with the next target the annual low at 139.86. Conversely, if they indicate they could pull away from their current cycles, then we could see a strong push higher for the pair.
Resistance 2: 148.02 – June 23 High
Resistance 1: 149.68 – 200-Day Moving Average
Support 1: 141.58 – Trendline Support
Support 2: 139.86 – 2025 Low
