Dollar Retreats Amid Oil Price Decline as BOJ Meeting Looms

The US dollar reached its highest level in seven weeks after the Federal Reserve raised interest rates and signaled further hikes. The move was seen as a commitment to curbing inflation, which helped alleviate fears of supply disruptions.

However, the dollar's gains were short-lived, as energy prices continued to fall, leading to a decline in demand for the greenback. Oil prices dropped after Saudi Arabia offered extra crude cargoes through Oman, supporting the yen and euro instead.

The Bank of England held interest rates unchanged but warned that prolonged conflict in the Middle East may require tighter policy. The pound sterling slipped against the euro and dollar as a result.

Market participants are now focused on the Bank of Japan's (BOJ) meeting, where it is expected to raise interest rates to a 31-year high on Friday. BOJ governor Kazuo Ueda's comments on the timing and pace of further increases will be closely watched.