The Yen and Euro Strengthen Ahead of Jerome Powell’s Speech

The dollar continues to lose ground against the yen and euro amid an adjustment in market expectations ahead of today’s speech by Federal Reserve Chair Jerome Powell. Market participants are expecting the Chair to comment on the outlook for interest rates and inflationary pressures in the United States.

An additional factor contributing to downward pressure on the dollar could be the upcoming release of U.S. data on building permits, new home sales, and crude oil inventories. Although these reports have not yet been published, analysts expect a moderate slowdown in the figures. This is fuelling speculation about a more dovish stance from the Fed in the coming months. In anticipation of these developments, market participants are adopting a cautious position, which is reflected in declining interest in the dollar.

The external backdrop is also contributing to the decline in demand for the dollar. Markets responded positively to reports of a potential de-escalation in the conflict between Israel and Iran, as well as indications of a partial withdrawal of the United States from direct military involvement. This has eased geopolitical tensions and supported the rise of so-called safe-haven currencies such as the yen and euro.

In the upcoming trading sessions, market dynamics will be focused on the tone of the Fed Chair’s speech. Should his remarks confirm a willingness to ease policy in the second half of the year, the dollar may continue to decline locally against major currencies. Otherwise, a corrective rebound in the dollar may begin.

USD/JPY

The USD/JPY pair has declined to the 144.90 level, reacting to increased interest in so-called safe-haven currencies ahead of key speeches by Fed officials. If current conditions persist, the yen could continue strengthening—especially if Powell adopts a dovish tone regarding inflation risks. Technical analysis of USD/JPY suggests a possible retest of support around 143.40–144.00, in line with the development of a shooting star pattern.

Events that may influence USD/JPY pricing include:

• Today at 15:30 (GMT+3): U.S. Building Permits
• Today at 17:00 (GMT+3): U.S. New Home Sales
• Today at 17:00 (GMT+3): Speech by Fed Chair Jerome Powell
• Today at 17:30 (GMT+3): U.S. Crude Oil Inventories

EUR/USD

The EUR/USD pair is trading near 1.1620, having confidently surpassed the 1.1500 level. The euro is also being supported by relative stability in the Eurozone and expectations of a softer Fed stance in the coming months. Technical analysis of EUR/USD points to the possibility of a continued upward move—either from current levels or after a correction to the 1.1550–1.1570 range.

Key events for EUR/USD pricing include:

• Today at 10:00 (GMT+3): Spain GDP
• Today at 11:00 (GMT+3): Speech by Bundesbank representative Mauderer
• Tomorrow at 09:00 (GMT+3): Germany Consumer Climate Index