Forex Today: BoJ and the Fed take centre stage

The FX universe navigated an inconclusive session on Tuesday amidst rising prudence ahead of the BoJ and Fed policy meetings on July 31. While the Fed is expected to keep rates on hold, Chief Powell could shed further details regarding a potential rate cut in September. Consensus, in the meantime, appears pretty divided when it comes to the BoJ.

Here is what you need to know on Wednesday, July 31:

The USD Index (DXY) gave away initial gains and settled in the mid-104.00s against the backdrop of further decline in US yields across the curve. The Fed meets on July 31 and is seen keeping rates unchanged. Extra releases on the US docket include the weekly Mortgage Applications, the Employment Cost index, Pending Home Sales and the ADP Employment Change.

EUR/USD kept the bearish performance and briefly pierced the 1.0800 support to print four-week lows just to regain some balance afterwards. Germany’s Retail Sales and the labour market report are due on July 31 seconded by preliminary Inflation Rate in the broader euro area.

GBP/USD remained well on the defensive in the low-1.2800s as investors continued to price in a potential rate cut by the BoE on August 1. There are no data releases scheduled on the UK calendar on July 31.

Renewed buying interest in the Japanese yen prompted USD/JPY to fade the earlier uptick and refocus on the downside around the 153.30 zone. The BoJ will decide on rates on July 31. In addition, flash Industrial Production is due along with Retail Sales, Consumer Confidence and Housing Starts.

AUD/USD seems to have entered a consolidative theme near 0.6530, always on the back of Chinese concerns and persistent weakness in the commodity space. The Inflation Rate, Housing Credit, Retail Sales and the RBA’s Monthly CPI Indicator are all expected on July 31.

Another negative session dragged WTI prices to fresh lows in the sub-$75.00 region per barrel, as traders assessed incessant demand concerns from China.

Gold prices printed acceptable gains and approached the $2,400 mark per ounce troy amidst the irresolute price action in the US dollar and declining yields. Silver regained some composure and reversed Monday’s pessimism, reclaiming the area beyond the $28.00 barrier per ounce.