Ella 
The yen gave up recent gains on Thursday as the dollar strengthened following the hawkish tone from the Federal Reserve, boosting the USD/JPY pair. At its policy meeting on Wednesday, the Federal Open Market Committee (FOMC) kept its benchmark lending rate in the range of 5.25%-5.50% for the seventh consecutive time, which was widely expected.
The yen may have limited downside ahead of the Bank of Japan (BoJ) policy decision on Friday as caution prevails. While the BoJ is widely expected to keep interest rates unchanged, traders will be closely watching for any announcement that the BoJ may reduce its monthly bond purchases.
The U.S. Dollar Index (DXY), which measures the value of the greenback against six major currencies, recovered its recent losses. The recovery can be attributed to the hawkish stance of the Federal Reserve. Policymakers at the FOMC now expect only one rate cut this year, down from three projected in March.
The CME FedWatch tool shows that the probability of the Fed cutting interest rates by at least 25 basis points in September has fallen to 61.5% from 69.4% a week ago.
Investors awaited Thursday’s release of weekly U.S. jobless claims and the producer price index (PPI) for further insight into the state of the U.S. economy.
