Forex Today: It's all about Fed policy decisions and Powell's presser

Here is what you need to know on Wednesday, February 1:

February starts with a bang as investors eye key macroeconomic data releases and the US Federal Reserve's (Fed) policy announcements. Eurostat will publish January inflation figures ahead of the European Central Bank's policy meeting on Thursday. The US economic docket will feature the ADP's private sector employment report and the ISM's Manufacturing PMI survey for January. After the Fed releases the policy statement alongside the interest rate decision at 1900 GMT, FOMC Chairman Jerome Powell will deliver his comments on the policy outlook and respond to questions from the press from 1930 GMT.

 Federal Reserve Preview: The Good, the Bad and the Ugly, why the US Dollar would rise.

The US Dollar Index stays quiet near 102.00 early Wednesday after having snapped a three-day winning streak on Tuesday. The positive shift witnessed in risk sentiment following the Employment Cost Index data, which rose at a softer pace than expected in the fourth quarter, made it difficult for the US Dollar to outperform its rivals in the American session. Meanwhile, the benchmark 10-year US Treasury bond yield retreated to 3.5% and Wall Street's main indexes registered strong daily gains. With investors moving to the sidelines ahead of high-tier events, US stock index futures trade modestly lower on the day. 

During the Asian trading hours, the data from New Zealand revealed that the Unemployment Rate edged higher to 3.4% in the fourth quarter from 3.3% in the third quarter. In the same period, Employment Change came in at +0.2%, falling short of the market expectation for an increase of 0.3%. NZD/USD came under bearish pressure and declined toward 0.6400 before recovering to 0.6450 in the early European morning. In the meantime, the Caixin Manufacturing PMI in China improved modestly to 49.2 in January from 49 but failed to trigger a significant market reaction.

EUR/USD registered small daily gains on Tuesday but lost its recovery momentum before reaching 1.0900. Inflation in the Euro area, as measured by the Harmonized Index of Consumer Prices, is forecast to edge lower to 9% on a yearly basis in January from 9.2% in December.

GBP/USD closed the third straight trading day in negative territory on Tuesday before going into a consolidation phase slightly above 1.2300 early Wednesday. 

USD/JPY failed to make a decisive move in either direction on Tuesday and closed the day virtually unchanged. The pair extends its sideways grind above 130.00 mid-week. Jibun Bank Manufacturing PMI in Japan came in at 48.9 in January as expected.

Gold price staged an impressive rebound after having declined toward $1,900 on Tuesday. XAU/USD is having a difficult time gathering further bullish momentum but holding its ground at around $1,930.

Following Monday's sharp decline, Bitcoin recovered marginally on Tuesday. Early Wednesday, BTC/USD is fluctuating in a narrow range at around $23,000. Ethereum shook off the bearish pressure after having declined toward $1,500 earlier in the week and rose more than 1% on Tuesday. At the time of press, ETH/USD was trading marginally lower on the day at $1,575.