USD Strengthens Against Yen Ahead of FOMC Decision

The US dollar has strengthened against the Japanese yen ahead of the Federal Open Market Committee (FOMC) decision, with expectations of a September interest rate hike firming up. A Reuters poll found 86 out of 101 economists expect the Fed to raise rates this week, while futures imply roughly four hikes by July 2027.

The US dollar index has gained ground against most major currencies, including AUD/USD, EUR/USD, GBP/USD, and NZD/USD. The yen bears have finally flipped, with USD/JPY attempting to grind its way higher after a sharp selloff last week.

Fed hike expectations have boosted the US dollar's bid, helping USD/JPY recover from its recent decline. However, if the Fed or FOMC forecasts fail to hint at a second hike priced in for December, the dollar could face another selloff.