Forex Today: US inflation report and Fed policy decisions to dominate markets

Here is what you need to know on Wednesday, June 12:

The US Dollar (USD) holds steady early Wednesday as investors gear up for key macroeconomic events that could significantly impact the currency's valuation. The US Bureau of Labor Statistic will release the Consumer Price Index data for May in the early American session. Later in the day, the Federal Reserve will announce monetary policy decisions and publish the revised Summary of Economic Projections (SEP), the so-called dot plot.

The action in foreign exchange markets remained choppy in the absence of high-tier data releases on Tuesday. Although the USD Index registered daily gains, it struggled to gather bullish momentum. The benchmark 10-year US Treasury bond yield lost more than 2% and Wall Street's main indexes ended the day mixed. The annual CPI is forecast to rise 3.4% in May, matching April's increase. On a monthly basis, the CPI and the core CPI, which excludes volatile food and energy prices, is expected to increase 0.1% and 0.3%, respectively. Later in the day, the Fed is set to leave the policy rate unchanged at 5.25%-5.5% range. Investors will pay close attention to macroeconomic projections, especially the interest rate.

US CPI set to steady in May ahead of Federal Reserve decision.

The data from China showed earlier in the day that the CPI declined 0.1% on a monthly basis, while the annual CPI rose 0.3%. After closing the day virtually unchanged on Tuesday, AUD/USD edged higher in the Asian session on Wednesday and was last seen trading slightly above 0.6600.

Australian Dollar trades with modest gains, awaits Fed rate decision.

USD/JPY extends its sideways grind above 157.00 early Wednesday after failing to make a decisive move in either direction on Tuesday. The Producer Price Index in Japan rose 0.7% on a monthly basis in May, surpassing the market expectation for an increase of 0.4%.

Japanese Yen may see limited downside due to higher producer prices.

The UK's Office for National Statistics reported that the UK economy stagnated in April, with the monthly real Gross Domestic Product arriving at 0%. In the same period, Industrial Production contracted by 0.9% and the Manufacturing Production decreased by 1.4%. GBP/USD largely ignored these readings and was last seen fluctuating slightly below 1.2750.

EUR/USD remained under bearish pressure and registered its lowest daily close in over a month below 1.0750 on Tuesday. The pair struggles to stage a rebound and continues to trade below 1.0750 in the European morning on Wednesday.

After finding support near $2,300, Gold recovered modestly and registered small gains on Monday and Tuesday. XAU/USD stays relatively quiet in the European morning and fluctuates above $2,310.

Gold price fails to attract buyers as traders await US CPI and Fed decision.