The Japanese yen hovered around 163.4 per dollar on Wednesday, lingering near its weakest level in four decades as investor's exercised caution ahead of the Federal Reserve's closely watched monetary policy announcement. While the U.S. central bank is widely expected to leave interest rates unchanged, markets continue to assign a meaningful probability to a 25-basis-point rate hike, underscoring elevated policy uncertainty and reinforcing broad-based dollar resilience. Adding to market unease, geopolitical tensions resurfaced after the U.S. military reported intercepting a surprise Iranian attack targeting American troops in the Middle East, lending further support to safe-haven demand for the U.S. dollar. Domestically, the Bank of Japan is expected to maintain its policy rate at Friday's meeting while preserving a measured tightening bias. However, the absence of a definitive policy roadmap, coupled with largely ineffective verbal intervention by Japanese authorities, has done little to arrest the yen's persistent depreciation, leaving the currency vulnerable to further downside pressure.
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