The US dollar has strengthened against the euro and British pound but experienced a sharp decline against the Japanese yen. This shift in currency markets comes amid expectations that the Bank of Japan will continue tightening its monetary policy while the Federal Reserve is poised to begin easing.

According to Report, which cites the ICE Dollar Index (DXY), measuring the dollar's performance against six major currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling, and Swedish krona), the dollar fell by 1.15%. The broader WSJ Dollar Index also declined by 0.22%.

As of 9:10 Moscow time, the euro/dollar pair was trading at $1.0901, a slight 0.1% decrease from the previous session's close of $1.0913. The pound/dollar exchange rate dropped by 0.7% to $1.2715, compared to $1.2804 at the end of the previous session.

The dollar's value against the yen plummeted by 3% to 142.12 yen, a stark contrast from the 146.55 yen recorded at the end of last week. The yen is currently trading at its highest level in seven months.

Last week, the Bank of Japan raised its key interest rate to 0.25% and announced a reduction in monthly bond purchases. Most analysts believe this decision marks the beginning of a process to normalize monetary policy, with the possibility of two more rate hikes by the end of the current fiscal year (March 2025).

Meanwhile, a series of weak economic data from the United States has convinced the market that the Federal Reserve will cut its key interest rate in September. Some experts even suggest that the cut could be as much as 50 basis points, rather than the usual 25 basis points.