USD / JPY remains afloat in positive territory near 109.50 ahead of the FOMC

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  • USD / JPY recovered some of the weekly losses on Wednesday.
  • The US dollar index struggles to find direction, hovering near 93.20.
  • The 10-year US Treasury yield is posting modest gains ahead of the FOMC.

The pair USD/JPY it closed the first two trading days of the week in negative territory, but managed to reverse its direction on Wednesday. At time of writing, it was up 0.27% on the day to 109.51.

The positive shift in market sentiment following the People’s Bank of China (PBoC) decision to inject short-term cash appears to be making it difficult for the JPY to find demand. Reflecting the improvement in market mood, US equity index futures are up between 0.3% and 0.55%. Additionally, the benchmark 10-year US Treasury yield is increasing 1%, helping USD / JPY hold on to its daily gains.

Meanwhile, the Bank of Japan (BoJ) left their policies unchanged as expected, but Governor Haruhiko Kuroda reiterated that they will loosen the policy further without hesitation as needed, putting more weight on the JPY.

DXY remains calm before the FOMC

On the other hand, the US Dollar Index (DXY) is moving sideways near 93.20 for the second day in a row on Wednesday as investors refrain from taking large positions ahead of the FOMC policy announcements.

Market participants do not expect the Fed to change its policy rate, but the revised summary of the projections, the so-called dot plot, will be examined for new insights regarding the policy outlook. Should the Fed confirm the start of the asset downsizing before the end of the year, the USD / JPY could extend its rally. However, a subdued tone amid concerns about a slowdown in the global economy could trigger a DOLLAR sell-off and force USD / JPY to turn south.

Technical levels

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