- US Dollar Index makes a technical correction on Wednesday.
- Experts expect FOMC’s dot plot to show a lower number of rate hikes in 2019.
- BoJ’s Kuroda says that the bank will mull more easing if the price momentum is lost.
Following a drop toward the 111 mark yesterday, the USD/JPY reversed its direction and recovered all of its weekly losses on Wednesday. After touching a 5-day high of 111.70, however, the pair has gone into a consolidation phase with investors moving to the sidelines ahead of FOMC announcements. As of writing, the pair was trading at 111.52, adding 0.15% on the day.
Earlier today, Bank of Japan Governor Kuroda noted that weakness was spreading in China’s real economy and that they were watching the developments carefully. “We will mull more easing if the price momentum is lost,” Kuroda further added to weigh on the JPY.
On the other hand, the greenback pulled away from March lows and is clinging to small gains today to help the pair stay in the positive territory. At the moment, the US Dollar Index is up 0.05% on the day at 96.45.
Previewing the FOMC meeting, “The dollar has been in a narrow trading range for almost five months as concerns over changing circumstances in the US economy and the Fed’s rate pause have blunted the American currency’s rate and economic growth advantage,” notes FXStreet senior analyst Joseph Trevisani. “In this environment any change in the Fed’s economic and rate projections takes on an unusual importance. If there are new economic estimates Chairman Powell’s explanations will likely come as an afterthought to the market judgement.”
Technical levels to watch for
With a daily close above $111.50 (200-DMA), the pair could target 111.90 (Mar. 15 high) and 112.15 (Mar. 5 high). On the downside, supports are located 111.40 (20-DMA), 110.85 (100-DMA) and 110.55 (50-DMA).
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