Dollar Weakens Amid Yen Gains and Interest Rate Expectations

The US dollar index declined to around 98.8 on Tuesday for its second consecutive session as the yen gained strength.

This strengthening of the yen is attributed to expectations of more aggressive monetary tightening by the Bank of Japan and the continued unwinding of carry trades.

In the US, investors are focusing on upcoming inflation data, which could provide clarity on the interest rate outlook before the Federal Reserve's policy meeting next week. Markets currently give a 60% probability of a 25-basis-point Fed rate hike following stronger-than-expected jobs data last Friday.