USD/JPY remains above 149.00 awaiting BoJ and Fed decisions

• USD/JPY holds on to gains above 149.00 as the BoJ appears to be delaying its plans to abandon an ultra-dovish policy stance.
• Previously, big hikes granted by Japanese companies and stable inflation above 2% boosted BoJ rate hike hopes.
• The Dollar is trading sideways as attention focuses on Fed policy.

The USD/JPY pair exhibits strength above the crucial support of 149.00 early in the New York session. The pair is holding on to gains as market expectations rise that the Bank of Japan (BoJ) will delay its plans to abandon negative interest rates and yield curve control (YCC).

Large Japanese companies have rewarded historic wage growth, and inflation has remained persistently above the desired target of 2%, giving BoJ policymakers confidence to end the expansionary interest rate stance.

The factor that is limiting hopes of the BoJ raising interest rates is the absence of a catalyst, which could ensure a spiral in prices and wages. Investors seem confident that the BoJ will end its ultra-loose policy in April by raising interest rates from negative 0.1% to 0.1%.

Meanwhile, market sentiment improves with China's upbeat February retail sales and industrial production data. Data from China, higher than expected, shows a strong recovery in its national economy. S&P 500 futures have generated significant gains in the European session, portraying an improvement in the risk appetite of market participants.

The US Dollar Index (DXY) is trading sideways around 103.40 as investors focus their attention on the Federal Reserve's (Fed) interest rate decision, which will be announced on Wednesday. The Fed is expected to keep interest rates unchanged between 5.25% and 5.50%. Investors will focus on the dot chart that presents policymakers' forecasts for interest rates over time and economic projections.