Markets today witnessed tight trading ranges in Wednesday’s trading, as a sense of calm prevailed ahead of the key Federal Reserve Open Market Committee’s interest rate decision. Meanwhile, the Asian equity markets cheered the risk-on rally induced by the revived US-China trade optimism and the European Central Bank President Draghi’s rate cut talks.

Across the forex space, the Yen picked up mild bids on reports that a rocket hit the site of foreign oil firms’ headquarters in Iraq’s Basra. Therefore, the USD/JPY pair ran through offers and turned lower towards the 108.30 region. Meanwhile, the EUR/USD pair and the GBP/USD traded flat, awaiting fresh incentives from the key UK data and political updates while the dust settled over the dovish Draghi aftermath.

A busy EUR calendar kicked off with the German Producer Price Index (PPI) due at 06:00 GMT and will be followed by the Eurozone current account data dropping in at 08:00 GMT. The focus in the session ahead is likely to be the UK data flow slated for release at 08:30 GMT that includes the key May Consumer Price Index (CPI), Producer Price Index (PPI) and Retail Price Index. Markets will also look forward to the developments surrounding the UK political scenario, with the third ballot on the Conservative Leadership contest due later today. Also, of note remains the Eurozone construction output data at 09:00 GMT that will be published alongside the speeches by the EU Chief Juncker and ECB policymaker Lautenschlager. At 10:00 GMT, the UK CBI Industrial Trends Survey will be also eyed.

The NA session also remains a busy one, as the ECB President Draghi speaking for the third straight day on Wednesday, as he will deliver the closing remarks at the ECB Forum in Sintra at 14:00 GMT. The US EIA weekly crude stockpiles data will drop in at 14:30 GMT.

The main event risk for today remains the Federal Reserve Open Market Committee’s (FOMC) monetary policy decision due to be announced at 18:00 GMT. The Fed is likely to stand pat on its interest rates but will likely indicate rate cuts on the cards in the coming months amid dwindling global growth outlook, slowing inflationary pressures and trade war.

Oil prices extended gains into a second session on Wednesday, buoyed by rekindled hopes for a U.S.-China trade deal and potential economic stimulus from the European Central Bank. Tensions in the Middle East after tanker attacks there last week also supported oil markets.

Gold prices kept its range near $1,250 levels amid pre-Fed caution trading. While markets do not anticipate any changes to be made to interest rates when the Fed’s decision is announced Wednesday, expectations are high that the U.S. central bank will open the door to rate cuts later this year.