USD/JPY stuck in a 130.10-130.20 range as DXY steadies, Fed’s policy in the limelight

The USD/JPY pair is sustaining itself above the round level support of 103.00 in a quiet trading session.  It looks like the anxiety over the interest rate decision by the Federal Reserve (Fed) has sucked volumes from the market, which has left the market in the doldrums.

Fed chair Jerome Powell is expected to stand by his statement dictated in his testimony at the International Monetary Fund (IMF) last month that a rate hike by 50 basis points (bps) is on the cards. An elevation of the interest rates by a jumbo rate hike is going to expand volatility in the market. However, a mega rate hike statement is already discounted by the market participants but what matters most now is the announcement of the balance sheet reduction and guidance for the remaining five monetary policies this year.

Meanwhile, the US dollar index (DXY) is struggling to establish above 103.50 and is likely to perform lackluster until the Fed chair Jerome Powell dictates the decision of the policymakers.

The Japanese yen has remained vulnerable for the past few trading sessions on ultra-loose monetary policy announcement by the Bank of Japan (BOJ). Prudent guidance is promised by BOJ Governor Haruhiko Kuroda to spurt the aggregate demand in the economy by keeping the rates to near ground levels and additional stimulus packages at some intervals. The holiday-truncated week in Japan will participate lesser in the week, therefore focus will remain shifted to the Fed’s policy majorly.