The dollar is trading to the lows for the day with USD/JPY now close to clipping 147.00, down over 1% at the moment:
There's a lot at stake this week when it comes to the Fed. The price action today suggests that broader markets are not settled or that traders and investors think something big is coming. Think along the lines of a Fed pivot. That's the most important narrative that needs to be sorted out as we look towards the FOMC meeting tomorrow.
Sure, the rumour about China setting up steps to re-open is also a big step in the right direction but until there is any real truth to that, the Fed will remain the major focus point this week.
If there is any crack in the resolve by the Fed tomorrow, it's not that they risk a misstep in the battle against inflation. It is more so that they risk credibility and that is something markets will look to punish. Any slight softening in their messaging will no doubt result in a whopping rally for risk trades.
For the dollar? That might be what signals a top.
