U.S. Dollar hesitant as investors assess monetary policy By Investing.com

Investing.com – The was cautious on Monday, with investors evaluating the future monetary policy after numerous central bank meetings took place last week. Meanwhile, the Japanese experienced vulnerability due to the Bank of Japan maintaining its ultra-easy policy.

Following a series of key decisions by central banks, including an unchanged interest rate by the Federal Reserve and a hawkish hint at further hikes to manage inflation, investor focus now shifts towards Fed Chair Jerome Powell’s congressional testimony later this week. Experts believe that Powell has another opportunity to convey a more assertive message during his testimony.

Despite market expectations for tightening measures from central banks to cease in July, there is still uncertainty surrounding whether two additional hikes will be implemented this year. As economic strength continues and optimism grows regarding a ‘soft landing’ scenario where inflation drops without causing a recession, some experts maintain that significant growth downturns are necessary for inflation targets to be achieved.

In contrast to other major currencies, the yen suffered losses following Friday’s announcement that the Bank of Japan would uphold its -0.1% short-term rate target and 0% cap on 10-year bond yield under its yield curve control (YCC) policy. The decision led analysts such as Mansoor Mohi-uddin, chief economist at Bank of Singapore, to predict that while officials may lift or end their yield cap in 2023 amid firming inflation rates they will likely keep deposit rates negative to encourage further growth.

As currency fluctuations continue across global markets—such as near seven-month lows for the yen against the dollar and new record lows against the euro – the coming weeks are expected to bring greater clarity around worldwide monetary policies through pivotal events like Powell’s upcoming congressional address.