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The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.
AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.
Gold struggles to capitalize on its weekly gains, though it holds above the $4,300 mark through the Asian session. The latest optimism over an interim US-Iran peace deal keeps the US Dollar on the defensive, which is seen supporting the bullion. The commodity remains below the weekly swing high set on Monday and a technically significant 200-day SMA level.
The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.
The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.
