The dollar dipped versus the yen on Monday, although potentially decisive events such as the Federal Reserve meeting midweek limited movements.
The dollar dipped 0.2 percent to under 102 yen, moving towards the bottom of its relatively tight 102.80-101.60 yen range seen so far this month. Iraq's battle against insurgents kept investors on edge, and in search of safe-haven currencies like the yen. The dollar index, a measure of the greenback's strength a basket of key currencies, stood little changed.
The index had gained about 0.3 percent the previous week, helped by factors including higher U.S. Treasury yields and its status as a safe haven as conflict in Iraq escalated. Both the dollar and yen tend to attract safe-haven bids during times of geopolitical tension.
In focus was whether the dollar can gain further should the Federal Reserve provide new hints on the timing of interest rate hikes when it concludes its two-day policy meeting on Wednesday. Currently expectations are for the Fed to begin raising rates about a year from now, and the dollar is seen benefiting from any hawkish comments by the central bank.
The traded flat near $1.35, within sight of a four-month trough of $1.3503 hit earlier this month when the European Central Bank eased monetary policy. Market participants expect the single currency to come under further pressure against the dollar should the Fed's statements on Wednesday cause a further divergence in monetary policies between the ECB and the Fed.
The dollar, on the other hand, was on the back foot against currencies enjoying support from central banks more hawkish than the Fed.
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