ForexLive European FX news wrap: Dollar nudges higher with the Fed in focus

Headlines:

• Welcome to Fed day
• USD/JPY eyes potential major breakout going into the Fed later
• UK February CPI +3.4% vs +3.5% y/y expected
• What’s priced in for the BOE now after the UK CPI data
• ECB’s Lagarde says cannot commit to rate path even after first cut
• Germany February PPI -0.4% vs -0.1% m/m expected

Markets:

• USD leads, JPY lags on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields down 0.9 bps to 4.288%
• Gold down 0.2% to $2,154.03
• WTI crude down 0.9% to $82.02
• Bitcoin down 0.8% to $63,199

It was a slower session after a busy Tuesday yesterday, as markets are waiting on the FOMC meeting later today.

The dollar is keeping firmer across the board with traders seemingly positioning for more of a hawkish hold perhaps. 10-year Treasury yields holding near 4.30% still is also a factor underpinning the greenback since last week. Besides that, softer UK and Canada inflation, a sell the fact play on the BOJ, and a dovish RBA makes for a couple of reasons why traders are still favouring the dollar this week.

USD/JPY continued to race higher to 151.80 as it eyes its 2022 and 2023 highs of 151.90-94 ahead of the Fed. Meanwhile, EUR/USD is contesting its 200-day moving average again as it is down 0.2% to 1.0840. GBP/USD is also marked down by 0.2% to just under 1.2700 currently.

Looking at the commodity currencies, USD/CAD is retesting the 1.3600 mark once again after offers resisted a break of the figure level yesterday. And AUD/USD is down 0.2% to 0.6515 and closes in on a potential test of the 0.6500 mark.

In the equities space, French luxury stocks are the ones lagging in Europe after Kering warned of a 10% revenue slide in Q1. Other regional indices are more mixed with US futures also just marginally higher as equities keep little changed in general.

Bitcoin was a decent mover as the volatile swings continue in the last one week. It fell to a low of $60,780 before recovering back to just above $63,000 now on the day.

Over to the Fed now.

This article was written by Justin Low at www.forexlive.com.