USD/JPY Awaits FOMC Decision with Subdued Trading.

The USD/JPY pair is experiencing a lack of clear direction on Wednesday and is trading within a narrow range. The subdued performance of the US dollar is holding back the pair, while a positive risk sentiment is providing some support. Traders seem hesitant and are waiting for the highly-anticipated FOMC decision.

The USD/JPY pair is struggling to build on the gains of over 150 pips from the previous day and is trading below the weekly high reached earlier in the day, hovering around the 132.55-132.60 area. Investors are eagerly awaiting the outcome of the FOMC monetary policy meeting, which is scheduled to be announced later during the US session. The Fed is expected to deliver a smaller 25 bps rate hike, and the focus will be on the accompanying monetary policy statement, updated economic projections, and Fed Chair Jerome Powell's post-meeting press conference remarks.

Investors will be looking for fresh cues on the future rate-hike path, which will play a key role in influencing the near-term US dollar price movements and providing a fresh directional impetus to the USD/JPY pair. The US dollar is currently trading near its lowest level since February 14, which is acting as a headwind for the major. However, the stable performance of equity markets is undermining the safe-haven Japanese Yen (JPY), which is providing some support to the pair.

The Fed recently unveiled an enhanced seven-day dollar swap to add liquidity into the monetary system, while the news that UBS will rescue Credit Suisse in a $3.24 billion deal has eased fears of a global banking crisis and boosted investors' confidence. These factors, along with the more dovish stance adopted by the Bank of Japan (BoJ), are likely to continue supporting the USD/JPY pair, at least in the short term.