Major tech stocks fall sharply but the Dow Jones average rebounds
This suggests that SNAP (the camera app company), whose online advertising is a main revenue source, still has a strong impact as it is mainly being sold.
For major indices to rebound significantly, a tech-led rally is essential, and this short-cover could weigh on that.
Lagarde's remark that it is highly possible to eliminate negative rates by the end of the third quarter led to euro buying.
With the end of the third quarter approaching, the current -0.5 is expected to be raised to 0 by September, making a 25bp rate hike in July-September highly likely.
The dollar had been selling off on weak PMI data, and that move was accelerated by these expectations.
Dollar/yen broke below the 2.75-3% 10-year yield range, signaling a breakdown of the range.
Previous dayBoštík Committee memberstated that rate hikes would stop in September and that effects would be reviewed, which may have been the trigger.
Trading around the mid-126 yen range.
● Stock Market
The Dow Jones Industrial Average rebounded cleanly at a resistance line.
Technically, it continues on a clean path. Will it move higher with today's FOMC minutes?
In the short term, if you haven't picked up yesterday's move, you may wait for a pullback and data before taking action.
Sell opportunities are around 32,700 and 34,000 for now.
● USD/JPY
USD/JPY has adjusted its trend line.
If U.S. rates pause in September, it would shift from the current 2.75-3% zone to the 2.5-2.75% zone, implying that recent remarks suggest the bounce may be nearing its limit.
Above 2.75 tends to attract bonds, which would cap the upside for USD/JPY.
Therefore, USD/JPY is likely to have more room to rise around 127 yen.
Technically, it would be cleaner to see a rebound up to 127.5.
For today, focus on the resistance around 127-127.2.
The stance remains to sell on rallies. Since the neckline has been broken, 125 yen is the near-term target rate.
● EUR/USD
There is movement from pronouncements, but it is rising while remaining in a fairly horizontal range.
With only a little left to 1.08, reaching it after digesting the FOMC minutes would make short-term shorts easier to hold.
If today's FOMC minutes bolster the Boštík committee member's hawkish stance, we can expect a stock rally and dollar downside with bond buying.
Apart from that, nothing stands out, so we are waiting for the minutes around 3:00 a.m. Japan time.
