- USD / JPY is witnessing moderate and range-limited price action at the start of the European session on Wednesday.
- Nervousness ahead of key FOMC decision benefits safe haven JPY and limits gains.
- The drop remains supported, as investors appear reluctant to enter ahead of the key event.
The pair USD/JPY you are extending your lateral consolidation move and staying stuck within a range below the 114.00 level at the start of the European session on Wednesday.
The pair struggled to capitalize on the previous day’s rebound from the 113.45 region and witnessed subdued and range-bound price action during the first half of trading action on Wednesday. Investors are nervous ahead of the critical FOMC meeting. This was evident by cautious market sentiment, which benefited the safe-haven Japanese yen and it acted as a headwind for USD / JPY amid a softer tone around the US dollar.
The decline, however, remains supported, as investors appeared reluctant to open aggressive positions before the central bank event. The Fed will announce its monetary policy decision later during the US session and expected to begin reducing its $ 120 billion-a-month asset purchase program. Investors, however, would be looking for clues as to the likely time when the US central bank will raise interest rates.
The markets have been pricing in the prospects for an early tightening of monetary policies by the Fed amid mounting concerns about a faster-than-expected rise in inflationary pressures. Therefore, the focus will continue to be on Fed Chairman Jerome Powell’s remarks at the post-meeting press conference. This will play a key role in influencing short-term USD price dynamics and helping investors determine the next directional move for the USD / JPY pair.
In the meantime, investors could take the cues from the US economic calendar, with the releases of the ADP report on private sector employment and the ISM services PMI. The data could provide some boost to the USD / JPY pair, although the initial reaction is more likely to be minimal with investors waiting for a new catalyst from the latest monetary policy update from the FOMC.
USD / JPY technical levels
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