DXY Tumbles Near Two-Week Lows Amid Yen Rally

The US Dollar Index (DXY) continued its decline on Monday, trading around 98.90 and down 0.26% on the day, near two-week lows.

This drop is largely due to a sharp rally in the Japanese Yen (JPY), which has reached a six-and-a-half-month low near 154.40 amid hawkish Bank of Japan expectations, capital repatriation, and the unwinding of Yen-funded carry trades.

The US Dollar's value is also being weighed down by persistent inflation concerns, questions over policy credibility, and political risks, keeping the debasement conversation alive.

Traders have increased bets on a rate hike at the Fed's September 15-16 meeting following Friday's robust employment report, with around a 58% chance of a hike as seen by the CME FedWatch Tool.