US Dollar Main Driver Of Price Action; BoJ Eyed

Market participants will focus on the upcoming BoJ policy meeting on Friday, while digesting the FOMC rate announcement.

• The final FOMC decision of 2020 was ultimately in line with expectations, with new asset purchase guidance but no change to the asset purchase program itself. The decision and optimistic-looking summary of economic projections initially saw the US dollar strengthen before moving back to pre-announcement levels.
• US dollar strength saw USD/JPY briefly touch 103.92 before dropping back. The pair is up slightly in Asia, last at 103.49, up 2 pips.
• US dollar is seeing some softness in Asia after US Representative Hoyer, a member of the House Democratic leadership, said a fiscal aid deal could come as soon as tonight. Though other Congressional leaders have tempered this optimism suggesting negotiations could run into the weekend. All indications remain that both sides are keen to do a deal. President-elect Joe Biden said there would be need for additional measures by February.
• From a technical perspective the pair has breached Monday's low of 103.51 signaling scope for a deeper pullback. Attention turns to the key support of 103.18, Nov 6 low. A break of this level would negate a bullish engulfing reversal candle on Nov 9 and instead confirm a resumption of the broader downtrend. On the upside, firm short-term resistance resides at 104.76, Nov 4 high