Traders took a wait-and-see approach before today's press conference of Federal Reserve Chairman Jerome Powell. At the beginning of the US session, the US dollar index is consolidating around the level of 91.9. After steady growth for four weeks, the USD/JPY pair has halted its rally in the range of 108.30–109.20.

The day before, it tested the support level of 108.70. Later, it went higher. It signals the continuation of the bullish trend of the USD/JPY pair. It may break above the 109.20 level. The first target of bulls will be the level of 109.80. The trading range is projected to be between the support level of 108.70 and the resistance level of 109.80.

Nevertheless, the forecast may change after Powell's speech. It is still unclear how the US dollar will react to his comments. If Powell's remarks turn out to be dovish, it will have a negative impact on the US currency. Therefore, investors can stick to last year's strategy, when stocks spiked amid easy money policy.

If the Fed keeps its interest rate course and makes hints that it is ready to tighten monetary policy earlier than previously planned, the US currency may rise markedly. Bulls will return to the market pushing the US dollar higher against its main rivals.

Tightening of monetary policy is sure to be bullish for the greenback. However, Powell speaks cautiously and vaguely about possible changes. This is why the market reaction to the meeting results may be muted or incorrect. Market players may need time to analyze Powell's speech. Thus, the formation of real trends will take days, if not weeks.

The market movements may not be evident after a number of events on Wednesday but traders will eventually asses Powell's remarks. Investors want to know whether the regulator chooses a strong dollar and subdued inflation, or a weak dollar and a robust economy.

Judging by the more distant forecasts of economists, a strong dollar will be a priority. The USD/JPY pair may rise above the 110 level in April amid upbeat macroeconomic indicators from the US. In March, the USD/JPY pair may advance only to 109.50.

In the long term, the US dollar may rise against the yen to the level of 112.00 fostered by the uptrend in US Treasury yields, analysts believe.

The Bullish bias of Japanese traders will gain momentum whenever the US dollar will decline to the level of 108 against the yen and below. Investors in Japan seem to have completed the conversion of dollar earnings to yen before the fiscal year closes on March 31.