Dollar Steady Ahead of Fed, BOJ Meetings Amid Market Expectations for Rate Hikes

The US dollar remained stable as investors waited for key policy decisions from both the Federal Reserve and Bank of Japan. The yen, however, approached a seven-month high, with speculators turning to a net long position on the currency for the first time since February.

Market expectations are that the Fed will raise interest rates this week, following data showing US consumer prices accelerated in August. The CME FedWatch tool showed an 86% chance of a rate hike.

The European Central Bank raised rates last week and warned of further hikes, setting the stage for the Fed policy decision on Wednesday and a widely expected rate hike from the BOJ on Friday.