Investor Bets and Fed Moves Trigger Broad Dollar Decline

The U.S. dollar experienced a significant drop, particularly against the yen, due to investor anticipation of a dovish Federal Reserve stance in upcoming policy meetings. Key economic data from Canada, Japan, and the U.S., along with central bank actions, are influencing market movements. Expectations for rate cuts are shaping currency trends.

The U.S. dollar declined broadly on Monday, with a notable slide against the yen, as investors anticipated a dovish tone from the Federal Reserve in its upcoming policy meeting minutes and Chair Jerome Powell's speech at Jackson Hole.

On Wednesday, the Fed will release its July meeting minutes, followed by Powell's speech on Friday, both expected to steer currency movements for the week. The dollar fell more than 0.8% against the yen, retreating from a previous high, driven primarily by overall dollar weakness.

Elsewhere, the euro and sterling edged towards recent highs amid market adjustments. Traders have priced in a September rate cut from the Fed, while future price movements will likely be influenced by Powell's upcoming remarks.

(With inputs from agencies.)