Dollar Firms as Oil Prices Skyrocket Ahead of Fed and BOJ Decisions

The US dollar has strengthened ahead of crucial policy decisions by the Federal Reserve and Bank of Japan. Investors are bracing for potential rate hikes, which could further push up interest rates globally.

Oil prices have risen above $100 per barrel due to tensions in the Middle East, exacerbating inflation concerns. The European Central Bank raised rates last week, warning of more hikes to come.

The dollar index has risen 0.23% to 99.34, while the euro is 0.28% softer at $1.1565. The yen, however, has wobbled near a seven-month high, with speculators betting on a faster pace of rate hikes by the BOJ.

Analysts at MUFG expect the BOJ to hike rates roughly once every quarter, deviating from its previous gradual pace. A failure to deliver could lead to renewed yen weakness.