Dollar Holds Near Multi-Week High Ahead of Fed Rate Decision

The U.S. dollar held onto recent gains in Asian trading, staying close to multi-week highs against several major currencies ahead of the Federal Reserves rate decision.

Markets are pricing roughly a 90% chance of a 25-basis-point increase, leaving less attention on the rate move itself and more on whether further tightening is signalled after the meeting.

فہرست

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USD/JPY Moves Back Above 155

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Euro and Pound Stay Near Recent Lows

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Rate Outlook Becomes the Main FX Driver

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USD/JPY Moves Back Above 155

The dollar strengthened to around 155.43 against the yen, taking USD/JPY to its highest level in about a week.

The move comes despite expectations that the Bank of Japan could also raise rates at its upcoming meeting. Market pricing puts the probability of a Japanese rate increase at around 80%.

With both central banks facing higher rate expectations, the pair is again trading largely on changes in the expected rate gap between the two countries.

Euro and Pound Stay Near Recent Lows

EUR/USD traded around 1.1535, not far from the one-month low of 1.1523 reached earlier in the week.

Sterling was also under pressure near 1.3470, close to its lowest level in roughly six weeks.

The Australian dollar was steadier around 0.7126, while the New Zealand dollar fell to about 0.5749, its weakest level in two months.

Rate Outlook Becomes the Main FX Driver

U.S. Treasury yields have moved higher alongside expectations for tighter monetary policy. The 10-year yield briefly moved above 5% in the previous session, helping the dollar index reach around 99.6 and its strongest area in roughly two weeks.

With a rate increase already heavily priced in, the next move in the dollar is likely to depend more on the outlook after the meeting than on the headline decision.

USD/JPY remains particularly sensitive because the Bank of Japan decision follows shortly afterward, while EUR/USD and GBP/USD are trading close to recent lows heading into another round of central-bank decisions.

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