USD/JPY was trading around 163.85 in the Asian session on Tuesday. The dollar
lacked direction as investors awaited the Fed policy decision on Wednesday. CME
FedWatch shows a 62% probability the Fed will keep rates at 3.50%-3.75% and
signals a higher chance of a September hike. Market participants do not expect
the policy statement or the chair's press conference to provide rate guidance;
the chair said at the last meeting that "forward guidance is not applicable at
the current policy juncture." Traders are focused on how long US inflation will
remain above the Fed's 2% target. In Tokyo, investors await the BOJ decision on
Friday, with the central bank expected to keep the policy rate at 1% and to
strike a hawkish tone on the outlook.
