The US dollar asserted dominance across major currency pairs on Tuesday as markets braced for the Federal Reserve's highly anticipated monetary policy decision. During the Asian session, the greenback posted gains against all key rivals, with the Japanese yen showing the most pronounced weakness. Traders now await the Federal Open Market Committee (FOMC) verdict and the Bank of Japan (BoJ) meeting scheduled for Friday.
Broad Dollar Performance
Today's trading saw the dollar register positive changes against every major currency. The currency heat map reveals that as the base currency, the dollar advanced versus the yen, euro, pound, Australian dollar, and Canadian dollar as quote currencies. US bond yields hovering near multi-year highs provided the primary underpinning for dollar strength.
USD/JPY: Contested Ground Near 155.00
The dollar-yen pair hovered around the psychological 155.00 level. Higher US yields pushed the pair upward, but expectations of a BoJ rate hike on Friday created a ceiling. Market participants note that a more hawkish repricing of the BoJ's normalization path could bolster the yen and cap further USD/JPY upside.
Commodity Markets: Oil Surges, Gold Falters
West Texas Intermediate (WTI) crude extended its rally, trading above $105 per barrel as Middle East supply disruption fears intensified. Gold, after a tepid recovery attempt in early August, has surrendered ground again. Having peaked near $4,700 a month ago, the yellow metal now trades closer to the $4,000 mark, pressured by renewed dollar demand.
Australian Dollar at Three-Week Low
The AUD/USD pair remained below 0.7150 during Tuesday's Asian session, touching its lowest level in over three weeks. Elevated US bond yields ahead of the FOMC meeting, combined with oil-driven inflation risks, supported the dollar and weighed on the Aussie. Mixed Chinese activity data for August failed to inspire any meaningful recovery in the Australian currency.
Cryptocurrency Sector Declines
Major altcoins traded in negative territory on Tuesday. Ripple (XRP), Cardano (ADA), and Hyperliquid (HYPE) each shed roughly 2%. The downturn comes ahead of Tuesday's scheduled cloture vote on the CLARITY Act, with investors adopting a cautious stance pending regulatory clarity.
Editorial Appointment
FXStreet welcomed Agustin Wazne as a Junior News Editor, focusing on commodities and major currency pair coverage.
