Dollar Steady as BOJ Hikes Loom, Yen Strength Driven by Geopolitics
The US dollar has maintained its stability around 99.15 on the dollar index while the Japanese yen has reached a seven-month high against the greenback, trading at 153.49.
Market consensus suggests that the Bank of Japan will increase interest rates by 25 basis points at its upcoming meeting on September 17-18.
Speculators have turned net long on the yen for the first time since February 2026, but analysts warn that if the BOJ hikes without providing further guidance, USD/JPY could rebound towards the 157-160 range.
The US Treasury Secretary's recent comments have added pressure to the yen's strength, affecting carry trade positions. Additionally, oil prices have surpassed $100 per barrel amid escalating geopolitical tensions involving the US and Israel in Iran, which could impact Japan's economy and inflation rates.