USD/JPY struggles near 7-week lows, below mid-112.00s ahead of FOMC

   “¢   Persistent USD selling keeps exerting pressure for the fourth straight session.
   “¢   Fed rate hike uncertainty continues to dent sentiment around the greenback.
   “¢   Monetary policy updates by the FOMC and BoJ to determine the near-term trajectory.

The USD/JPY pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band, just above seven-week lows touched earlier.

The pair extended last week’s retracement slide from levels beyond mid-113.00s and kept losing ground for the fourth consecutive session in wake of a strong follow-through selling around the US Dollar.

The greenback remained on the back-foot through the mid-European session on Wednesday, hovering near a one-week low amid expectations that the Fed may slow, or even halt its rate hike cycle in 2019.  

However, the prevalent risk-off mood, as depicted by strong gains across European equity markets, dented the Japanese Yen’s relative safe-haven status and helped limit deeper losses.  

Adding to this, traders might also be reluctant to place any aggressive bets and prefer to wait for the release of the Fed’s new forecasts for economic growth and interest rates, known as the “dot-plot”.

Apart from the latest FOMC decision, the latest BoJ monetary policy update, due to be announced during the Asian session on Thursday, will help determine the pair’s next leg of a directional move.

Technical levels to watch