The dollar weakened below ¥111.50 in late afternoon trading Monday in Tokyo as investors retreated to the sidelines prior to the U.S. Federal Reserve’s two-day policy-setting meeting that starts Tuesday.
At 5 p.m., the dollar stood at ¥111.48-48, down from ¥111.65-65 at the same time Friday. The euro was at $1.1349-1349, up from $1.1325-1325, and at ¥126.51-52, up from ¥126.44-45.
After moving around ¥111.40-50 early in the morning, the dollar topped ¥111.60 toward noon on real demand-backed purchases. The greenback was also supported by the Nikkei 225’s extended rally, traders said.
But the dollar lost steam and moved around ¥111.50 for most of the afternoon amid a dearth of major buying incentives.
Players held active trading in check to wait for the outcome of the Fed’s Federal Open Market Committee meeting, an official from a major Japanese bank said.
Another domestic bank official said the dollar-yen pair has been struggling for direction, with the dollar weighed on by lower U.S. long-term interest rates and the yen by higher U.S. and Asian stock prices.
The market is cautiously watching developments related to Britain’s planned departure from the European Union, an official of a foreign exchange margin trading service firm said.