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  • USD/JPY has been going sideways within a thin 109.60-109.90 range.
  • Markets are looking forward to the release of the FOMC minutes of the March meeting for direction.

USD/JPY has been going sideways for the most part since the start of Wednesday’s Asia Pacific session. The pair is currently trading just above the lows of the day in the 109.60s, close to the bottom of its intra-day 109.60-109.90 range. To the downside, there is a key area of support around the 109.40 mark, with the mid-March highs, the 29 March low and the 21-day moving average all coinciding with one another.

Driving the day

It’s been an uneventful session so far in terms of fundamental catalysts. On the data front, US trade numbers in the month of February saw the country post another record trade deficit of above $70B for the first time. Meanwhile, in terms of the latest on the pandemic, concerns persist regarding the spread of the virus in India, Japan, South Korea and Europe, while UK and EU medical agencies just released updated guidance for the AstraZeneca vaccine, with the former stating that the jab is linked to rare blood clots, though the benefits of taking the vaccine still outweigh the risks.

Given the lack of fundamental catalysts on the session so far, it is unsurprising to see USD/JPY rangebound. The pair is reflective of a broader sense of market indecision; US equities are narrowly mixed/flat, the US dollar is mixed versus its major counterparts and the DXY flat, while US government bond yields are very modestly lower with the 10-year yields just under 1.65%. The main event of the session, after which markets may be able to find some renewed direction, is the release of the minutes of the FOMC’s March meeting at 19:00BST.

“The release of the Fed Minutes on Wednesday should provide some indication about how committed the FOMC is to keeping interest rates at current lows” says Capital Economics. Other desks note that one key point of interest will be any reference the minutes make to the frequency of opinions expressed in favour of tightening policy earlier if the Fed’s current forecasts come into fruition. “If the minutes bring forward market expectations of interest rates hikes then the US dollar could strengthen, putting downward pressure on commodity prices” comments Capital Economics – silver is, of course, likely to be included in the commodity prices that would fall if the minutes came out more hawkishly than expected.