The dollar strengthened Tuesday as markets focused on central bank policy decisions, with the Bank of Japan holding interest rates steady in a split vote. The yen initially firmed but later eased against the dollar. The BOJ also revised up inflation forecasts while slashing growth projections for the coming years.
BOJ Governor Kazuo Ueda indicated a potential rate hike but offered no clear timeline, leading strategist Takeshi Ishida to note the yen pared early gains after Ueda's press conference proved less hawkish than anticipated.
Japanese Finance Minister Satsuki Katayama reiterated warnings against currency market speculation, signaling readiness for decisive action. Meanwhile, the U.S. dollar index rose nearly 0.3 percent.
Markets are also anticipating the Federal Open Market Committee meeting, where rates are expected to remain unchanged. Analysts suggest the FOMC's economic assessment may improve, though the inflation picture remains a slow-moving issue.
Central banks in the euro zone, UK, and Canada are also set to announce rate decisions this week. The euro and British pound saw modest declines against the dollar.