USD/JPY continues to move sideways above 108, ignores US data ahead of Fed

• Housing starts and building permits in the US rose more than expected.
• Trump said he instructed Secretary of Treasury to increase sanctions on Iran.
• US Dollar Index stays calm below 98.50 ahead of the Fed's policy announcements.

The USD/JPY pair trades in a very tight range above the 108 handle for the second straight day on Wednesday as investors refrain from making large bets while waiting for the Federal Open Market Committee (FOMC) to announce its monetary policy decisions later today. As of writing, the pair was up 0.07% on the day at 108.20.

Markets ignore the US data ahead of FOMC

Earlier today, the data published by the US Census Bureau showed that housing starts and building permits rose 12.3% and 7.7%, respectively, but failed to trigger a market reaction. At the moment, the US Dollar Index continues to move sideways near 98.40.

Previewing the FOMC's September meeting, "We now expect the Fed to cut the FFTR by another 25bps in the 17/18 Sep 2019 FOMC," United Overseas Bank analysts.

"We also project two more 25bps “insurance” rate cuts in the 29/30 Oct and the 10/11 Dec FOMC, bringing the upper bound of the FFTR lower to 1.5%, well below the 2% inflation target."

FOMC Preview: What 13 major banks are expecting from September meeting?

Meanwhile, US President Donald Trump today announced that he instructed the Secretary of Treasury Steve Mnuchin to increase sanctions on Iran as a response to the attack on Saudi Arabia's oil facilities. Nevertheless, these comments had little to no impact on the market sentiment and the 10-year US Treasury bond yield is down 1.5% on the day while Wall Street's main indexes are posting modest losses in the early trade.

Technical levels to watch for