USD/JPY consolidates at the highest in 6-weeks ahead of Fed’s decision

USD/JPY rose earlier to 112.50, for the first time since Mar 21 and the pulled back modestly. During the last hours, the pair has been consolidating around 112.30/35, waiting for the Federal Reserve decision. The FOMC statement will be released at 18:00 GMT. 

According to analysts from Lloyds Bank, the decision is expected to be largely a non-event. “We expect the Fed to leave US policy rates unchanged with the upper bound at 1% and to make little change to the press statement. There is no scheduled post-meeting press conference or forecast updates at this meeting. Hence, we do not expect a clear signal just yet of an intention to hike interest rates in June”. 

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The US dollar remains quiet in the market consolidating gains. Earlier today the ADP employment report showed that the private sector increased payrolls by 177K, in line with expectations. The greenback gained momentum following the report and also Mnuchin comments. After Fed’s statement, attention would turn again to jobs data, with the release of NFP on Friday. 

Technical levels 

To the upside, if the decision of the US central bank triggers a USD rally, resistance levels could be seen at 112.50 (daily high), 112.85/90 (Mar 16 low / Mar 20 & 21 high) and 113.25. On the downside, support could be seen at 112.30 (May 2 high), 111.95 (daily low) and 111.60 (Apr 27 high). 

When is the Fed interest rate decision and how could affect DXY?