Daily Forex Highlights – Jun 17 – FOMC decision looms; BI expected to hike tomorrow

📌 What Moves Markets Today

The Fed is widely expected to hold rates at 3.75% today, but markets are waiting for Chair Warsh's tone. Bank Indonesia is also meeting tomorrow, with 22 of 35 economists expecting a 25bp hike to 5.75%. The Australian dollar is caught between the RBA's hawkish hold and a bearish technical setup ahead of FOMC.

🔴 Bearish for AUD near-term (below key SMAs). 🟡 Neutral for USD until Fed guidance is clear. 🟡 Rupiah faces pressure ahead of BI decision.

🔥 Quick Takes

Dollar

- ADP weekly employment (four weeks to May 30): Private sector added 25,500 jobs per week on average → Job growth continues to cool. A dovish signal.

- FOMC meeting today: Rates expected to stay at 3.75%. Markets will focus on Chair Warsh's tone and the dot plot. Any hawkish signal could lift the dollar.

Euro

- ECB chief economist: Inflation pressures are still building. Oil prices are unlikely to fall sharply. If evidence shows inflation concerns, rates may need to go higher again → A clear hawkish warning. More hikes are on the table.

- ECB's Escriva: The energy supply situation will remain complex → No quick fix for Europe's energy issues.

- France 2026 GDP forecast cut: The central bank now sees 0.5% growth, down from 0.9% → A sharp downgrade for the euro zone's second-largest economy. Bearish for the euro.

Asia-Pacific

- South Korea: Inflation is expected to stay around 3% in the second half and remain above target next year. AI-driven growth could complicate the outlook → Higher inflation for longer. The won may face less easing pressure.

- South Korea regulator: Warned investors against high-risk or excessive leverage. Will strengthen monitoring of risk factors amid rising market volatility → A cautionary tone. Authorities are watching the markets closely.

- Reuters poll on BI (Bank Indonesia): 22 of 35 economists expect a 25bp rate hike to 5.75% or higher on June 18. The year-end 2026 rate forecast was raised to 5.75% from 5.50% → Hawkish expectations are building. The rupiah is on watch.

- Sweden: Origo Group survey shows 12-month inflation expectations at 1.7%, up from 1.6% in March → A slight uptick. The Riksbank may stay cautious.

- Chile holds rates at 4.50% as expected → No surprise. No immediate policy shift.

- Sweden holds rates at 1.75% as expected → No surprise. No immediate policy shift.

- Singapore MAS survey: 62% of respondents expect no policy change at the July review → A dovish consensus. The SGD is likely to stay stable.

💡 Technical Analysis

EUR/USD

The pair is defending bids above 1.1600 in early European trading. However, bulls appear hesitant, with most waiting for the FOMC outcome before committing to any directional move. Price is consolidating near 1.1600 after last week's recovery from 1.1500. RSI is near 50, reflecting market indecision. The 20-day MA is flat, suggesting a neutral near-term bias.

AUD/USD

The pair is consolidating above the mid-0.7000s. US-Iran peace optimism is keeping dollar bulls on the defensive, while the RBA's hawkish hold on Tuesday provides some support. However, the daily chart shows AUD trading at 0.7072, below both the 100-day SMA (0.7085) and the 55-day SMA (0.7124), keeping the near-term bias tilted to the downside. RSI near 45 suggests subdued momentum. ADX at 29 suggests the bearish trend remains technically intact.

Resistance: 0.7079, 0.7085 (100-day SMA), 0.7124 (55-day SMA). A sustained break above these would be needed to ease bearish pressure. Support: 0.6833, 0.6660, 0.6593.

USD/IDR

The rupiah is under pressure ahead of tomorrow's BI rate decision. A 25bp hike to 5.75% is widely expected. If BI delivers, it could provide some support for the currency. If it holds, the rupiah could face further downside.

🔮 What to Watch This Week

- FOMC meeting today – any shift in tone from Warsh?

- Bank Indonesia decision tomorrow – hike to 5.75% expected

- South Korea – more intervention or monitoring?

- France growth downgrade – wider euro zone impact?