Dollar Faces Decline as Investors Await Trump's Policies

The dollar steadied ahead of Trump's inauguration but is set for a weekly decline after a six-week rise. Investors are focusing on potential U.S. policy shifts and interest rate changes by the Fed and BOJ, while global markets remain volatile.

The dollar held steady on Friday yet faced a weekly drop, breaking a six-week winning streak. Investors are keenly focused on Donald Trump's upcoming presidential inauguration and the anticipated policies of his administration.

The yen showcased strength this week, positioning itself for the strongest performance in over a month. Expectations for a rate hike by the Bank of Japan have contributed to this, applying downward pressure on the dollar.

Market sentiment is cautious as investors wait for Trump's inaugural speech to clarify potential policy directions, while softer U.S. economic data and comments from Fed officials suggest future rate cuts remain on the table.

(With inputs from agencies.)