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  • US dollar loses momentum during the American session, before the FOMC. 
  • USD/JPY off lows, moving in a small range. 

The USD/JPY pair dropped to 108.96, reaching a fresh daily low but then rebounded rising back to the 109.15 area. Prices across financial markets are moving sideways, as market participants await the outcome of the FOMC meeting. 

At 19:00 GMT, the Federal Reserve will announce its decision on monetary policy. No change in rates is expected and the focus will be on the statement and Powell’s press conference. “An “appropriate” Fed coupled with the prospects of upcoming balance sheet tweaks should reinforce the supportive backdrop for the USD. We expect a mostly neutral Fed today but that, in turn, should reinforce the environment seen over the past few days. It’s a gentle push higher in the USD but prevailing ranges persist”, explained TDS analysts. 

Technical outlook

The USD/JPY pair has been trading sideways with a modest bullish bias over the last sessions, attempting to recover from the sharp decline from above 110.00 to 108.80, on the back of the spread of the coronavirus. 

The bearish pressure is still there but not as strong as on Monday. For the greenback to recover momentum, it needs to rise back above 109.40 (20-day moving average). On the flip side, below 108.85, the yen will likely strengthen. The next strong support below is located around 108.40.