The dollar index held near 98.5 as new diplomatic updates from Tehran, including a proposal to reopen the Strait of Hormuz, eased pressure on defensive demand. Attention now turns to the Federal Reserve meeting, where policy settings are expected to remain unchanged.

The Bank of Japan kept its policy rate at 0.75%, the highest since 1995, while raising its FY2026 inflation forecast to 2.8% and lowering the growth outlook to 0.5%.

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