USD/JPY Slips Ahead of Fed and BoJ Meetings Amid Softening Dollar

The USD/JPY pair traded slightly lower on Monday, hovering around 163.70 during the European session as the US Dollar weakened amid improving investor sentiment.

Geopolitical tensions eased after Washington and Tehran confirmed a temporary halt in attacks, reviving expectations that diplomatic negotiations between the two countries could resume.

The softer tone in the US Dollar was also evident in the US Dollar Index (DXY), which remained under pressure, while US equity markets advanced as investors shifted toward riskier assets.

Attention is now firmly focused on the Federal Reserve's policy announcement on Wednesday and the Bank of Japan's meeting on Friday. Both central banks are expected to leave interest rates unchanged, making policymakers' guidance the primary market driver.