USD/JPY remained mostly steady on Tuesday, as market players were wary ahead of the Federal Reserve’s policy meeting outcome on Wednesday, which could provide hints if interest rates were nearing a peak.
Trading was subdued on Tuesday, as two more central banks, Bank of England and the European Central Bank, are expected to announce their policy decisions later in the week.
Markets are expecting a 25 basis point rate hike from the Federal Reserve this week, which would take the target range to 4.50%-4.75%.
Futures pricing also indicates two additional 25 basis point hikes are expected, before rate cuts later in 2023.
“Traders will need to marry the tone of the statement and (Fed chair Jerome) Powell’s press conference with this pricing structure,” Chris Weston, head of research at Australian brokerage Pepperstone was quoted as saying by Reuters.
“In the less likely outcome that the Fed give the impression that they could pause after this week’s hike, then the U.S. dollar could easily sell off and risky assets rally.”
Investors will be also paying close attention to US employment cost numbers, due out on Tuesday, as labor market developments could be key for central bank monetary policy.
Meanwhile, the Japanese Yen looked set to register its third consecutive month of gains against the US Dollar on expectations that Bank of Japan may introduce shifts in monetary policy.
The Yen has advanced 0.60% against the US currency so far in January, following 5.08% and 7.10% gains in December and November respectively.
As of 8:42 GMT on Tuesday USD/JPY was inching down 0.02% to trade at 130.288, while moving within a tight daily range.
The US Dollar Index was gaining 0.32% on the day to 102.567.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 130.03
R1 – 130.86
R2 – 131.40
R3 – 132.23
R4 – 133.06
S1 – 129.49
S2 – 128.66
S3 – 128.12
S4 – 127.58
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
