The dollar weakened ahead of the Federal Reserve's upcoming policy decision, the first under Chair Kevin Warsh. Optimism surrounding a potential U.S.-Iran peace deal lifted risk appetite in markets. Investors stayed cautious as they awaited details on any shifts in monetary policy.
The dollar came under pressure as traders positioned themselves before the Federal Reserve meeting. A softer tone in the greenback also weighed on the yen, even after the Bank of Japan delivered its widely expected rate increase.
Market participants focused on possible changes to the Fed's stance on interest rates and inflation risks. The anticipated decision marks the first since Warsh took the helm at the central bank.
Broader sentiment received support from hopes of progress toward a U.S.-Iran peace agreement, which encouraged moves into higher-risk assets.
