Dollar Stalls Near One-Month High Ahead of Fed Decision

The US dollar hovered near a one-month high on Tuesday as investors waited for this week's Federal Reserve meeting. Asian currencies traded in tight ranges, with the USD/JPY pair holding steady at around 163 yen. Markets priced in a roughly 38% chance of a 25-basis-point Fed rate hike.

The Japanese yen remained near multi-decade lows as traders looked to Friday's Bank of Japan decision for guidance on policy normalization. The South Korean won and Taiwan dollar underperformed, while the Chinese yuan's offshore and onshore pairs traded largely unchanged.

Hopes for a diplomatic breakthrough between the US and Iran extended the previous session's decline in crude prices, easing fears of another energy-driven inflation shock. The Singapore dollar edged higher as traders continued to digest Monday's policy tightening from the Monetary Authority of Singapore.