Governor Waller expressed a more dovish stance following the Federal Reserve’s decision to keep rates unchanged. He is not overly concerned about the total impact of tariffs on inflation and suggests that rate cuts could occur as early as July.

Market indices have responded positively, with the Dow increasing by 111 points, the Nasdaq rising by 65 points, and the S&P climbing by 15.13 points. Despite this, the US dollar has experienced a modest decline in response to Waller’s comments.

Currency Pair Movements

In terms of specific currency pairs, the USDJPY has decreased from a high of 145.71 to 145.54. The previous week’s high was 145.47, while the 50% retracement from the May high sits at 145.375. Further movement below these levels could indicate increased control by sellers.

The USDCHF has also seen a slight dip from its highs of 0.8176, now trading at 0.8162. The 100 and 200 hour moving averages are at 0.8159. A price drop below these moving averages could push the technical bias more towards the downside in the short term.

Waller’s unexpected tone, leaning towards easing, has nudged expectations for a rate cut sooner than many had planned for—possibly in July. He played down the inflationary risks posed by tariffs, giving markets a clear enough green light to press ahead with risk appetite. The reaction in equity indices was swift and uniform, reflecting a market more interested in forward guidance than lingering on the current policy pause. Bond markets, meanwhile, have grown increasingly attentive, adjusting yield curves in response to his view.

Trading Perspective

Though equity gains stood out, the currency markets responded in a more nuanced manner. Bucked by shifting interest rate expectations, the dollar’s pullback following these dovish remarks wasn’t sharp but was still enough to give short-term traders room to reposition. Against the yen, the dollar slipped back below last week’s high, and more critically, beneath a retracement level stemming from the last upward swing seen in May.

From a trading perspective, the breach of 145.47 opens up attention towards the midpoint of that previous leg higher. This suggests that bears have begun reasserting themselves, quietly but with momentum building. If price holds below that 50% mark, there’s increased likelihood of further downward action—at least in the forthcoming sessions.

We’ve also seen subtle but telling movement in the USDCHF rate. After touching 0.8176 earlier today, it eased down towards the convergence of both the 100-hour and 200-hour moving averages clustered near 0.8159. It’s a textbook area where price reacts; a drop beneath this zone won’t be overlooked. Technical traders will be particularly sharp-eyed here, because short-term bias could tilt more definitively to the bearish side if sellers manage sustained pressure.

With these developments in mind, we’ve had to adjust our immediate positioning frameworks. The reaction function is now clearer. Watching how price interacts around key technical points will be more valuable than broad economic narratives for now. If directional volatility increases, especially intraday, it’ll be less about surprises and more about the recalibrated expectations starting to embed. The entries and exits may become tighter, but the opportunities grow more defined.

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