USD Grasping to Higher-Low Ahead of the Fed
DXY pushed down to support to start the week with a strong push from USD/JPY bears testing the 140.00 handle. But - that breakdown couldn't hold and with the FOMC just about 24 hours away we've seen some short-covering ahead of the big day. In my view the big driver for the USD since the July high has been USD/JPY and that carry unwind theme, which I think will remain a major push point around tomorrow. A more dovish Fed with more cuts in the forecast gives USD/JPY longs more reason to unwind carry trades. A more prudent path could see continued short-cover from shorter-term bears. And EUR/USD may just be along for the ride as the European economy isn't exactly in a significantly better spot than the US and we'll probably be seeing more cuts from the ECB, as well. - js
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