USD/JPY continues to lose ground this week. In Wednesday’s North American session, the pair is trading at 111.16, down 0.24% on the day. On the release front, there are no Japanese events this week, so U.S. indicators will have a magnified effect on the direction of the pair. In the U.S., it was a mixed day. ADP nonfarm payrolls soared to 275 thousand, crushing the estimate of 181 thousand. Will the official nonfarm payrolls follow suit on Friday? ISM Manufacturing PMI slowed to 52.8, shy of the estimate of 55.0 points. Later, the FOMC will set the monthly benchmark rate and release a rate statement. On Thursday, the U.S. posts unemployment claims.

After an aggressive stance in 2018, the Federal Reserve has become dovish, reflecting a slower U.S. economy. The Fed is projected to stay on the sidelines and maintain rates at a range between 2.25-2.50 percent. The Fed hasn’t raised rates since December and has signaled that it could freeze rates until next year. The most recent inflation numbers will reinforce that stance, as the Fed target of 2.0% remains elusive. The Core PCE Price Index, which is the Federal Reserve’s preferred gauge for inflation, came in at 0.0% in March and 0.1% in February (the two events were released on Tuesday due to the government shutdown earlier this year). On an annualized basis, the indicator gained 1.6%, just shy of the estimate of 1.7%. GDP and consumer spending are looking bright, but nonetheless there is no danger of the economy overheating, so the Fed can afford to leave rates at the current level for the near future.

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