- USD/JPY struggles to find direction, extends consolidation near 105.00.
- US Dollar Index drops below 94.50 ahead of FOMC decisions.
- Wall Street’s main indexes trade in the positive territory.
The USD/JPY pair dropped to its lowest level since early March at 104.81 on Wednesday but staged a modest rebound during the American trading hours. As of writing, the pair was posting small daily gains at 105.12.
Choppy market action ahead of Fed
The JPY seems to be having a difficult time finding demand as a safe-haven. Reflecting the upbeat market mood, Wall Street’s main indexes opened in the positive territory on Wednesday and continued to push higher ahead of the all-important FOMC policy announcements.
As of writing, the S&P 500 and the Nasdaq Composite were up 0.75% and 1%, respectively. Meanwhile, the 10-year US Treasury bond yield, which was down 1% earlier in the session, is now flat on the day at 0.581%.
On the other hand, the greenback struggles to attract investors and causes USD/JPY’s recovery to remain shallow. At the moment, the US Dollar Index is losing 0.25% on the day at 93.49.
Previewing the FOMC event, “we expect the Fed, and Powell in his press briefing, to express caution about recent economic trends given the hits to activity in the short-term,” ANZ analysts said. “We don’t expect any new policy developments at this week’s meeting, with the Committee keeping rates at the effective lower bound (ELB) and maintaining the current pace of its asset purchases.”
Earlier in the day, the data from the US revealed that the trade deficit in June narrowed to $70.6 billion and Pending Home Sales surged by 16.6%. Nevertheless, these figures had little to no impact on the USD’s market valuation.
Technical levels to watch for
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