The Japanese yen rose in Asian trading on Wednesday against a basket of major and minor currencies, extending its recovery for the third consecutive day against the US dollar and moving away from a 20-month low, supported by buying activity from lower levels ahead of the Bank of Japan meeting.

The US dollar continues to decline ahead of the Federal Reserve’s monetary policy decisions later today, where interest rates are expected to remain unchanged for the second consecutive meeting.

Price Overview

Japanese yen exchange rate today: the dollar fell 0.1% against the yen to ¥158.80, from the session opening level of ¥158.98, after reaching a high of ¥159.14.

The yen ended Tuesday’s trading up 0.1% against the dollar, marking its second consecutive daily gain, continuing its recovery from a 20-month low of ¥159.75.

Bank of Japan

The Bank of Japan’s second monetary policy meeting of 2026 begins later today, with decisions to be announced tomorrow Thursday. The bank will discuss recent economic developments in the world’s fourth-largest economy to determine appropriate monetary tools, as markets await its stance on interest rates and yield curve control amid new global developments.

Japanese interest rates

Markets price the probability of the Bank of Japan raising interest rates by a quarter percentage point at this week’s meeting at 5%, while the probability of a quarter-point hike at the April meeting stands at 35%.

In the latest Reuters poll, the Bank of Japan may raise interest rates to 1% in September.

Analysts at Morgan Stanley and MUFG wrote in a joint research report that they previously viewed the probability of a Japanese interest rate hike in March or April as low, but with rising uncertainty stemming from developments in the Middle East, the Bank of Japan is likely to adopt a more cautious stance, reducing the likelihood of a rate hike in the near term.

US dollar

The dollar index fell by less than 0.1% on Wednesday, extending losses for the third consecutive session and reflecting continued weakness in the US currency against a basket of global currencies.

Beyond profit-taking activity, the US dollar is declining as investors refrain from building new long positions ahead of the Federal Reserve’s monetary policy decision.

The Federal Reserve is expected to keep interest rates unchanged for the second consecutive meeting, while providing further commentary and projections that will shape the path of US monetary policy this year.

Major Wall Street indices posted modest gains on Tuesday as investors await the Federal Reserve’s interest rate decision amid rising energy costs driven by the escalating conflict in the Middle East.

Shares of airlines and travel companies, which are sensitive to fuel costs and had come under heavy selling pressure recently, saw some recovery after Delta Air Lines and American Airlines raised their revenue forecasts for the current quarter. Delta shares rose more than 4%, while American Airlines gained 2.7%.

However, concerns about prolonged supply disruptions due to the near-total closure of the Strait of Hormuz continue to support oil prices around $100 per barrel. These concerns, along with inflationary pressures stemming from tariffs, are a key focus of the Federal Reserve meeting, as policymakers balance inflation risks against signs of weakness in the labor market.

The central bank begins its two-day meeting on Tuesday, with traders widely expecting interest rates to remain unchanged in the decision scheduled for Wednesday. Data compiled by LSEG indicates that markets now price in only one 25-basis-point rate cut by the end of the year, compared with expectations of nearly two cuts before the outbreak of the war.

Brokerage firms have raised their energy price forecasts, which are likely to weigh on economic growth, a factor also highlighted by the Reserve Bank of Australia when it raised interest rates earlier in the day.

The interest rate-sensitive financial sector index rose 0.8%, recovering from sharp losses in the previous week when concerns about private credit quality unsettled investors.

Shares of asset managers Blackstone and Apollo Global Management rose more than 3% each, while KKR gained about 3%.

As of 12:07 PM Eastern Time, the Dow Jones Industrial Average rose 72.20 points, or 0.15%, to 47,021.88, while the S&P 500 gained 14.91 points, or 0.22%, to 6,714.29, and the Nasdaq Composite rose 53.68 points, or 0.24%, to 22,427.86.

The CBOE Volatility Index, known as Wall Street’s fear gauge, fell 0.62 points to 22.89, its lowest level in more than a week.

Energy stocks rose, with Occidental Petroleum gaining 1.3% alongside peer EQT Corporation, while ConocoPhillips climbed about 2%, supported by higher oil and gas prices.

Despite global disruptions caused by the war, US equities have shown greater resilience compared with their counterparts in Europe and Asia, amid expectations that the impact of the conflict on the economy will be less severe.

However, analysts indicate that investors have not yet fully priced in the implications of the war for the global economy.

The conflict has also led to the postponement of a planned summit between US and China leaders at the request of President Donald Trump.

In other moves, Eli Lilly shares fell 5.2% after HSBC downgraded the pharmaceutical company to “reduce” from “hold.”

Meanwhile, Uber shares rose 5.1% after announcing plans to launch autonomous taxi services in 28 cities starting next year, using Nvidia’s self-driving software.

Copper prices fell as inventories tracked by the London Metal Exchange jumped to their highest levels in more than six years, while demand for the physical metal remains under pressure due to elevated prices.

Futures for the key industrial metal declined 0.9% during midday trading in London to trade near $12,740 per ton. Meanwhile, exchange inventories surged by about 19,000 tons to 330,375 tons, the highest level since September 2019.

The rapid buildup in exchange inventories since the beginning of the year reflects growing bearish sentiment in the physical copper market, as sellers struggle to offload shipments amid weakening demand in China, while the rush to ship metal to the United States ahead of potential tariffs has eased. Prices, which hit a record above $14,500 at the end of January and remain about 30% higher than last year, have also prompted many buyers to hold back.

In contrast, aluminum prices recovered after a two-day decline, as uncertainty over the duration of the war in Iran continues to fuel concerns about further potential production cuts at major plants across the region.

The near-total closure of the Strait of Hormuz has disrupted shipments of metals from smelters as well as the supply of raw materials to them. Several companies have already reduced output, while analysts warn that the risk of further shutdowns will increase if the conflict persists.

According to estimates by Chinese research firm Mysteel, producers in the region could cut up to an additional 500,000 tons of annual output if the closure of the strait lasts between one and two weeks.

Mysteel said that current aluminum prices do not adequately reflect the impact of supply cuts and rising costs on the industry, adding that previous price forecasts, which were based on a quick resolution of the conflict, are no longer valid.

In a separate development, a technical issue on Monday halted electronic trading across all contracts on the London Metal Exchange for more than two hours, preventing traders from placing orders in markets ranging from aluminum to zinc.

As of 10:52 local time, copper futures on the London Metal Exchange were trading at $12,750.50 per ton. Other metals showed mixed performance, with aluminum rising 0.8% while nickel fell 0.4%.

Bitcoin traded relatively steady near the $74,000 level on Tuesday, trimming gains after briefly approaching $76,000, as investors monitored oil price volatility linked to the war in the Middle East and awaited central bank decisions.

The world’s largest cryptocurrency posted a slight gain of 0.2% to $74,291.5 after touching $75,991.2 over the past 24 hours.

Support from short covering and fund inflows

Bitcoin received support from short covering, as traders closed bearish positions built during the sell-off in early February. However, momentum eased خلال the session, leaving the currency trading near broadly stable levels.

Renewed institutional demand and continued inflows into spot exchange-traded funds (ETFs) also supported prices.

Axel Rudolph, market analyst at IG, said that despite the recovery, Bitcoin’s path during March has not been entirely smooth, as each upward move faced selling pressure near previous resistance levels as traders took profits after rapid gains.

He added that this pattern has led to rallies followed by periods of consolidation, as the market searches for a clearer direction.

War in Iran and oil prices in focus

Geopolitical tensions remain a key focus for markets as the conflict between the United States, Israel, and Iran enters its third week, keeping risk appetite fragile across global markets.

Despite an overnight pullback, oil prices rose again on Tuesday to remain above $100 per barrel amid ongoing concerns about supply disruptions through the Strait of Hormuz.

Higher energy prices have reinforced concerns about persistent inflation, influencing investor positioning across asset classes, including cryptocurrencies.

Rudolph noted that while heightened global tensions initially triggered a sell-off in high-risk assets, digital currencies have since begun trading more like defensive assets as the situation evolves.

Focus on Federal Reserve decision

Investors are now awaiting the Federal Reserve’s upcoming monetary policy decision on Wednesday, with expectations widely pointing to no change in interest rates, while attention will focus on any signals regarding inflation risks.

This week also features a series of global central bank meetings, increasing market sensitivity to any developments in monetary policy.

Other cryptocurrency moves

Ethereum, the world’s second-largest cryptocurrency, rose 1.5% to $2,314.73.

Ripple, the third-largest cryptocurrency, also gained 3% to $1.53 amid volatile trading in the altcoin market.