Forex Today: Market mood remains upbeat ahead of all-important Fed rate decision

Here is what you need to know on Wednesday, March 16:

Risk flows dominate the financial markets early Wednesday as investors remain hopeful for a diplomatic solution to the Russia-Ukraine crisis and the greenback stays on the back foot. February Retail Sales and Import Price Index data will be featured in the US economic docket ahead of the Federal Reserve's all-important interest rate decision. Consumer Price Index (CPI) data from Canada will be looked upon for fresh impetus as well. Additionally, negotiations between Russian and Ukrainian representatives are set to continue on Wednesday.

US Retail Sales Preview: Relentless shopper may provide dollar-selling opportunity ahead of the Fed.

Russian President Vladimir Putin said on Tuesday that Kyiv was not serious about finding a mutually acceptable solution to the conflict. Although this headline caused investors to turn cautious during the American trading hours, Wall Street's main indexes managed to post decisive daily gains. Mykhailo Podoliyak, one of the Ukrainian representatives, said that there certainly was room for a compromise. Moreover, Ukrainian President Volodymyr Zelenskyy noted in a video statement that negotiations were already sounding more realistic.

Reflecting the risk-positive market atmosphere, China's Shanghai Composite Index gained more than 3% and Japan's Nikkei 225 Index rose 1.6%. In the early European session, US stock index futures are up between 0.3% and 0.8%.

Later in the day, the Fed is widely expected to hike its policy rate by 25 basis points. Investors will pay close attention to the updated Summary of Economic Projections and FOMC Chairman Jerome Powell's comments on the policy outlook.

Fed Interest Rate Decision Preview: Is history a guide?

EUR/USD failed to hold above 1.1000 on Tuesday and ended up closing the day virtually unchanged at 1.0950. The pair stays relatively quiet below 1.1000 early Wednesday.

GBP/USD closed the second straight day in positive territory on Tuesday despite losing its bullish momentum near 1.3100. The pair is moving sideways near the mid-1.3000s in the early European morning.

After losing nearly 2% on Monday, gold fell 1.5% on Tuesday and touched its lowest level in two weeks below $1,910. XAU/USD is consolidating its losses above $1,910 as US Treasury bond yields move sideways.

USD/JPY clings to weekly gains above 118.00 as the JPY struggles to find demand as a safe haven. Kyodo news agency reported earlier in the day that the Japanese government was considering compiling a fresh economic package amid the Russia-Ukraine crisis.

Bitcoin spiked to a six-day high above $41,700 earlier in the day but returned below $40,000. Ethereum is edging higher after posting gains in the previous two days and was last seen rising 1% on the day above $2,600.