• Easing USD bearish pressure helped regain positive traction on Wednesday.
• Reemerging US-China trade tensions capped gains ahead of FOMC decision.
The USD/JPY pair reversed an early dip to 111.25 area and spiked to fresh weekly tops during the Asian session on Wednesday, albeit retreated few pips thereafter.
Despite a subdued action around the US Treasury bond yields, the US Dollar found some support and inched back closer to the 96.00 handle and turned out to be one of the key factors that assisted the pair to regain positive traction. However, reemerging US-China trade tensions, after Bloomberg reported that some US officials expressed concern that China is pushing back against the US demands in trade talks, underpinned the Japanese Yen's safe-haven bid.
This coupled with some repositioning trade ahead of today's key event risk - the latest FOMC monetary policy update, further collaborated towards keeping a lid on any strong follow-through up-move for the major. The Fed is widely expected to keep interest rate unchanged and reiterate that it’s in no hurry to make another move. Hence, the key focus will be on the accompanying monetary policy statement and updated economic projections.
Hence, it would be prudent to wait for a strong follow-through momentum in either direction before traders place some aggressive bets over the pair's near-term trajectory. Heading into today's event risk, the broader market risk-sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum through Wednesday's trading session.
Technical levels to watch
Immediate support is pegged near the 111.35-30 region, below which the pair is likely to accelerate the slide towards challenging the 111.00 round figure mark before eventually dropping to the 110.80-75 support zone. On the flip side, the 111.65-70 region might continue to act as an immediate hurdle, which if cleared might assist the pair to make a fresh attempt towards conquering the 112.00 round figure mark.
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