USD/JPY subdued below 115.00 handle ahead of Fed

The USD/JPY pair witnessed a lackluster trading action as investors preferred to wait on the sidelines ahead of the key event risks - FOMC and BoJ. 

The Fed is widely expected to announce a rate-hike at the end of its two-day meeting, later during NY trading session on Wednesday. Market participants, however, wait for additional clarity on the pace of further rate-hike and hence, focus would be on the updated economic projections, where the so-called dot-plots could trigger a fresh bout of volatility across global financial markets. 

A mildly negative sentiment surrounding the US treasury bond yields also pointed towards pre-FOMC cautious stance and is supporting the Japanese Yen's safe-haven appeal, eventually leading to a subdued price action surrounding the major.

Also collaborating to the cautious sentiment is the upcoming BoJ monetary policy decision, due to be announce during early Asian session on Thursday. Although the BOJ is expected to maintain status quo, market participants would look forward for any signals towards a move away from the central bank's ultra-loose accomodative monetary policy. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet notes, "the 50-DMA line has topped out and is now sloping downwards, thus, a failure to take out 115.45 (0.618 fib extension) followed by a break below 50-DMA (seen today at 113.86) would signal the rally from the recent low of 111.60 has topped out and the spot could revisit the same over the next couple of weeks. This scenario appears more likely if the Fed hikes rates by 25bps, keeps dot plot unchanged and the BOJ stays neutral. The Dollar Yen could drop to 110.00 levels if the BOJ talks about a potential hike in the yield curve target."