Dollar and Yen Steady as Investors Eye Central Bank Decisions

The dollar and yen held steady on Tuesday as traders awaited key central bank meetings, including those of the Bank of Japan (BOJ) and the Federal Reserve. The BOJ is expected to announce quantitative tightening plans, while markets anticipate a rate cut from the Federal Reserve in September.

The dollar and yen held steady within close ranges on Tuesday, as traders anticipated crucial central bank decisions, starting with midweek meetings from the Bank of Japan and the Federal Reserve.

The Japanese yen paused its recent rally as the BOJ commenced its two-day meeting, having gained over 2% against the dollar last week. Contributing factors included a global stock sell-off and monetary policy expectations.

The BOJ has indicated plans for quantitative tightening, likely halving its monthly bond purchases over two years. However, it remains uncertain if the BOJ will boost rates on Wednesday, which would be Japan's second increase this year. Market analyst Matt Simpson highlighted risks of no rate hike, which could weaken the yen.

Meanwhile, the Federal Reserve is expected to maintain current rates, with speculation that rate cuts could begin in September. Investors will closely scrutinize Fed Chair Jerome Powell's remarks for clues.

(With inputs from agencies.)