The FOMC meeting that ended on Wednesday, as expected, passed without surprises. The key rate is left unchanged in the 0-0.25% range, and will not change until the labor market reaches full employment and inflation reaches the 2% target. Monetary policy will remain adaptive, and the QE program will continue at the current level.

In an accompanying statement, the Fed reiterated President Biden's assessment of the US economy the day before, stating that the pace of recovery has slowed down, while there is a strong dependence of the recovery prospects on the situation around covid. This argument will obviously be decisive for a long time to come. Chair Powell, describing the recent rise in the stock market, explained that it was not caused by monetary policy, but the news about the vaccine and fiscal policy, as markets waited to reduce tension on coronavirus and new stimulus from Congress.

As a reaction to the results of the meeting, stock indexes fell, and demand for bonds is growing. Probably, the market considered the prospects for new Fed stimulus insufficient. Risk aversion will prevail in the coming days, with the dollar continuing to strengthen against most G10 currencies.

USD/CAD

The estimated price of the Canadian dollar continues to climb, and with more than a week's delay, the price on the spot also went up. The weakening of the Canadian dollar has a fundamental basis, although the reversal is almost not noticeable on long-term futures - the latest CFTC report showed a reduction in the long position on CAD by 139 million, to 811 million, that is, the reduction is weak and the report does not reflect a reversal of speculators in a bearish direction.

There was no significant macroeconomic data last week. The position of the Bank of Canada at the end of the last meeting looked neutral, and one can only pay attention to the words of BoC's governor Tiff Macklem, who said that the protracted strengthening of CAD creates obstacles for exporters, which can be interpreted as an unwillingness to reduce monetary incentives.

The current impulse was strong enough to break successively 3 previous highs, the next target is 1.2926. We should wait for the development of an upward movement, a rollback to 1.2800/30 is possible, after which the growth will resume.

USD/JPY

The yen, as expected, found a base, the dollar rate against the yen went up, but there is still no certainty that this is a global reversal and not a short-term correction. Of course, the dollar has been feeling a little more confident in recent days, but the general trend in the market is in favor of risk aversion, and therefore the demand for the yen may resume at any moment. On the CFTC, the long position on the yen looks solid, the target price is near the long-term average and still does not give a confident direction.

The Bank of Japan has no other choice but to continue its ultra-loose (now called "adaptive") policy. BoJ has increased asset purchases and introduced new support measures for corporations in response to the deteriorating COVID-19 situation, and there is increasing speculation in the media that the Bank of Japan may prepare to expand its target range of yield curve control for the yield level at its March meeting. For the Bank of Japan, the situation is dead-end, there is no chance to increase the near-zero profitability without simultaneously provoking the growth of the yen. Much may become clear at the meeting in March, but for now, it is necessary to proceed from the fact that the demand for risk is falling, and therefore after the formation of a local top, USD/JPY will go down.

After fixing above 104.42, the main resistance zone will become 104.70/80, we assume that somewhere near this zone, a maximum will be formed, after which the price will go to the lower border of the 103.30 range.