The US dollar jumped against major rivals in the European session on Wednesday, as US Treasury yields surged ahead of the Fed’s decision and investors focused on monetary policy forecasts.
The decision is to be made at 2 pm ET, followed by a press conference with Chairman Jerome Powell in half an hour.
The Fed is expected to keep its key interest rate near zero and its quantitative easing program at $ 120 billion a month.
Investors will follow Powell’s comments for any clues about a policy change.
The Fed is expected to offer an optimistic tone on the economic outlook. However, the regulator may declare that the economy is still far from making significant progress in achieving the goals in the field of employment and price stability.
The underlying yield on the 10-year bond rose 1.648%. The yield changes in inverse proportion to bond prices.
President Biden will also speak at the joint session of Congress as he approaches 100 days in office this week.
The greenback climbed to a 6-day high of 0.9182 against the franc, compared to yesterday’s close of 0.9134. The currency is likely to meet a resistance level around the 0., 3 level.
The US dollar hit 109.08 against the yen, setting a 2-week high. The next resistance level is seen around 110.00.
Data from the Ministry of Economy, Trade and Industry showed that retail sales in Japan rose 5.2% year-on-year in March to 13.498 trillion yen.
This exceeded expectations for a 4.7% rise after falling 1.5% in the previous month.
The greenback climbed to a 5-day high of 1.2056 against the euro, from a session low of 1.2093 seen at 5:30 pm ET. 1.16 is likely to be seen as its next resistance level.
The results of a survey by market research group GfK showed that consumer confidence in Germany will weaken in May, as rising infections and tightening isolation regimes affect consumption.
The leading consumer sentiment index fell to -8.8 points in May from a revised -6.1 points in April. According to forecasts, this figure should have increased to -3.5.
The US dollar climbed to 1.3862 against the pound since Tuesday’s close at 1.3908. If the dollar continues to rise, 1.35 is likely to be seen as its next resistance level.
The US dollar held steady against the Aussie, climbing to a 5-day high of 0.7725 in the Asian session. The pair closed yesterday’s trading at 0.7762.
Australian Bureau of Statistics data showed that consumer prices in Australia rose 0.6% in the first quarter of 2021.
The greenback fell to 1.2400 against the Canadian dollar and 0.7215 against the NZ dollar from early highs of 1.2418 and 2-day highs of 0.7188, respectively. The US dollar is poised to meet support at 1.22 against the Canadian dollar and 0.74 against the NZ dollar.
At the American session, data on retail sales in Canada for February and wholesale inventories in the United States will be published.
At 2:00 am ET, the Fed announces its interest rate decision. Economists expect the rate to remain at 0 -0.25%.