-65,836 USD｜The FOMC Changed the Market… Is the “Dollar-Only Strength” Market Beginning Again?
✅ Trading Results
June 15 – June 19
📊 Weekly Total: -65,836 USD
■ Weekly Summary
This week’s loss was simple.
“We underestimated the strength of the U.S. dollar.”
That sums it up.
There were some profitable positions, but the market continued to move against our expectations in:
・GOLD longs
・Crude oil longs
・USD/CHF
・Risk-asset-related trades
On the other hand, we were able to secure profits in:
・Crude oil shorts
・Silver rebound phases
As a result,
positions that went against the strong U.S. dollar became the main source of the overall loss.
■ The True Nature of This Week’s Market
This week’s market was:
“The week when the FOMC overturned everything.”
In the first half of the week, the market was driven by:
・Easing Middle East risks
・Falling crude oil prices
・Rising stock markets
・U.S. dollar selling
However,
after the FOMC, the market theme changed completely.
The focus shifted from:
“the Middle East”
to:
“U.S. monetary policy.”
What the market began to price in was not:
“the next rate cut”
but rather:
“the next rate hike.”
From that moment,
U.S. dollar buying began to dominate the entire market.
■ Structural Change in the Market
Until recently, the core market combination was:
・Higher stocks
・Weaker U.S. dollar
However, the market has now moved into a new phase:
higher stocks and a stronger U.S. dollar at the same time.
The background factors are:
・Concerns over renewed U.S. inflation
・A hawkish shift by the Federal Reserve
・Rising U.S. interest rates
Capital is flowing back toward the United States again.
■ Market Summary
Will the Dollar-Only Rally Continue?
The most striking point in last week’s market was this:
“The yen was not bought even after the Bank of Japan raised interest rates.”
What the market was watching was not this rate hike itself,
but whether:
“rate hikes will continue from here.”
As a result, the Bank of Japan maintained a cautious stance, while the FOMC delivered a more hawkish message than the market had expected.
This difference in policy stance came into focus,
and USD/JPY rose to the upper 161 yen range.
The market is once again shifting toward an environment where it looks for:
“reasons to buy the U.S. dollar.”
Looking across the currency market, the picture is very clear.
・The U.S. dollar is broadly strong
・The euro remains vulnerable to selling on rebounds
・The pound lacks strong supporting factors
・The Canadian dollar is weak despite the benefit of higher crude oil prices
・The Australian dollar and New Zealand dollar are being pressured by dollar strength
・The South African rand remains near high levels, but its upward momentum is slowing
In other words,
“only the U.S. dollar is strong.”
At this point, U.S. monetary policy and the direction of the dollar are determining the entire market more than Middle East developments or individual country-specific factors.
■ Focus for Next Week
The biggest theme next week remains unchanged.
Will the dollar-strength trend continue?
The market’s attention will be concentrated on three key points:
・U.S. PCE Price Index
・Flash PMI readings from major countries
・Expectations for additional Bank of Japan rate hikes
In particular, the PCE will be an important event that determines whether the post-FOMC dollar buying is justified, or whether it cools the recent overheating.
If sticky inflation is confirmed again,
the market may once again strengthen expectations for U.S. rate hikes,
and dollar buying could accelerate.
On the other hand, if the result is weak,
a correction in the dollar buying that has advanced so far may also occur.
■ Currency-by-Currency Strategy
USD/JPY
159.00 – 163.00
At present, dollar buying and yen selling are happening at the same time.
From a fundamental perspective alone, the direction is upward.
However,
from the upper 161 yen range to the 162 yen range, intervention concerns rise rapidly.
Therefore,
rather than chasing the uptrend, this is a phase where risk management should be prioritized.
EUR/USD
1.1200 – 1.1600
The basic strategy remains unchanged.
Selling on rebounds remains the dominant view.
The market is focused not on the ECB, but on the Federal Reserve.
As long as dollar strength continues, the upside for the euro is likely to remain limited.
GBP/JPY
211.00 – 216.00
The strength of the pound itself is limited.
GBP/JPY is being supported more by yen weakness than by pound strength.
The movement of USD/JPY will be the most important factor.
AUD/JPY
111.50 – 114.00
This is one of the currencies I am watching most closely next week.
Depending on the results of Australian CPI and employment data,
the market flow could change significantly.
CAD/JPY
113.00 – 115.50
The focus will be on Canadian CPI and crude oil prices.
However, under current conditions, dollar-strength pressure remains strong,
and this is not an environment where the Canadian dollar is being actively bought.
ZAR/JPY
9.60 – 10.00
The pair is maintaining a high level,
but it is around the highest level in approximately 11 years.
Caution is needed against profit-taking selling.
■ This Week’s Strategy Theme
The most dangerous thing in the current market is assuming that:
“dollar strength is over.”
Rather, we are now at an important turning point where we need to determine whether:
the dollar-strength trend will accelerate further,
or whether it will enter a temporary correction phase.
Therefore,
・Think with the U.S. dollar as the core
・Reduce countertrend trades
・Be aware of intervention risk only in USD/JPY
These three points are important.
■ Final Conclusion
The current market is testing whether:
“the second act of the dollar-only rally is about to begin.”
If next week’s biggest event, the PCE, comes in strong,
dollar strength may accelerate further.
However, USD/JPY is different.
Dollar-strength factors and intervention risk exist at the same time,
and the pair has entered a level where defense should be prioritized over chasing profit.
Next week’s basic strategy is simple.
“Do not go against the U.S. dollar. But do not chase USD/JPY.”
I believe this is the most rational approach.
■ Afterword: The Real Value of Children Playing Soccer
The World Cup is currently being held,
and when we watch the world’s best players perform,
many parents may think:
“Should I let my child play soccer too?”
Of course,
there is a possibility that a child could become a professional player in the future.
However, in reality,
the true value of soccer does not seem to lie there.
According to research, soccer is expected to provide many health benefits, including:
・Improved cardiovascular function
・Increased muscle strength
・Improved bone density
・Reduced body fat
・Improved concentration
・Reduced stress
What is even more interesting is that soccer is not just exercise.
It is also:
“a sport of thinking.”
On the field, players are constantly deciding:
Where should I move?
Who should I pass to?
Where is the open space?
They repeat these decisions instantly.
As a result,
soccer may also help improve attention, decision-making ability, and working memory.
This is somewhat similar to trading.
In the market as well,
where to enter,
where to wait,
and where to exit
are all constant decisions.
That is why I believe the purpose of letting children play sports is not only to aim for becoming professional athletes,
but also to develop:
a healthy body
and the ability to think.
When watching the World Cup,
we tend to focus on the goals.
But the real value may be found in the daily effort behind those moments.
Next week in trading as well,
rather than chasing flashy profits,
I want to focus on accumulating correct decisions.
That is what I want to value most.
