The U.S. dollar spiked up against its major counterparts in the European session on Wednesday, as U.S. treasury yields rose before the policy decision from the Federal Reserve, with investors focused on the monetary policy outlook.

The decision is due at 2 pm ET, followed by a press conference with Chairman Jerome Powell half an hour later.

The Fed is expected to keep the key overnight interest rate near zero and the QE program at $120 billion a month.

Investors will be watching Powell’s remarks for any clues on the direction of policy.

The Fed is expected to offer an optimistic tone on the economic outlook, while stressing that it still away from the “substantial further progress” towards its employment and price stability goals.

The benchmark yield on 10-year note rose 1.648 percent. Yields move inversely to bond prices.

President Biden is also to address the joint session of Congress, as he approaches 100 days in office this week.

The greenback approached a 6-day high of 0.9182 against the franc, compared to yesterday’s close of 0.9134. The currency is likely to find resistance around the 0.93 level.

The greenback hit 109.08 against the yen, setting a 2-week high. Next likely resistance for the currency is seen around the 110.00 level.

Data from the Ministry of Economy, Trade and Industry showed that Japan retail sales climbed 5.2 percent on year in March – coming in at 13.498 trillion yen.

That beat expectations for an increase of 4.7 percent following the 1.5 percent decline in the previous month.

The greenback climbed to a 5-day peak of 1.2056 against the euro, up from a session’s low of 1.2093 seen at 5:30 pm ET. On the upside, 1.16 is likely seen as its next resistance level.

Survey results from the market research group GfK showed that German consumer confidence is set to weaken in May as rising cases of infections and the tightening of the lockdown weigh on consumption.

The forward-looking consumer sentiment index fell to -8.8 in May from revised -6.1 in April. The score was forecast to rise to -3.5.

The greenback edged higher to 1.3862 against the pound from Tuesday’s close of 1.3908. If the greenback rises further, 1.35 is likely seen as its next resistance level.

The greenback held steady against the aussie, after having climbed to a 5-day high of 0.7725 in the Asian session. The pair had closed yesterday’s deals at 0.7762.

Data from the Australian Bureau of Statistics showed that Australia’s consumer prices rose 0.6 percent on quarter in the first quarter of 2021.

That was shy of expectations for 0.9 percent, which would have been unchanged from the three months prior.

In contrast, the greenback pulled back to 1.2400 against the loonie and 0.7215 against the kiwi, from its early high of 1.2418 and a 2-day high of 0.7188, respectively. The greenback is poised to challenge support around 1.22 against the loonie and 0.74 against the kiwi.

Looking ahead, Canada retail sales for February and U.S. wholesale inventories and advance goods trade balance for March will be published in the New York session.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 0 – 0.25 percent.

The material has been provided by InstaForex Company – www.instaforex.com

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