By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia. The fear that inflation would remain high, and that U.S. Federal Reserve might tighten its Monetary Policy have soured investor sentiment. However, the Japanese yen has seen a rise in safety-haven compared to the riskier.

By 10:41 ET (3:30 AM GMT), the that monitors the greenback in relation to a basket other currencies had dropped 0.06%, or 95.665.

It fell 0.37% to 113.66 in one week.

This pair dropped 0.50% from 0.7189 to 0.6730, while the other pair lost 0.36% from 0.6730 to 0.6730.

This pair increased by 0.03% to 6.33430. Close to its lowest point since Jan. 11, the pair fell 0.01% at 1.3593.

After recent gains, the U.S. dollar took a break as a drop in U.S. Treasury yields slowed. It was nevertheless on track for its highest week in the past two months.

Australian dollar dropped as much as 0.577% to 82.02yen. It was at its lowest point in a month. Last down 0.32% to trade as $0.72035.

U.S. stocks suffered a dramatic selloff in the last hours of trading while Asian peers were lower on Friday. U.S. Treasury Yields declined from multi-year highs. The market expectation that the Fed would tighten its monetary policy sooner than expected led to U.S. Treasury yields falling from multi-year highs.

Fed Funds futures already price in an interest rate rise in March 2022, and four more hikes in the next year.

Two-day Fed policy meeting will be held to announce its policy decision. It is scheduled for Tuesday. Investors will be on the lookout for clues to the Fed’s timeline for both interest rate hikes and asset tapering.

The greenback rose 0.65% in the last week, hitting a record high of more than one-week. This rebounded from its previous week’s 0.6% slide.

According to investors, despite recent volatility, there is a chance that the dollar will rise as the Fed tightens its monetary policy.

Westpac advised that currency would “continue to strengthen into the Fed meeting next week” and “wouldn’t be surprised” for it to surpass its 2021 high of 96.938.

It was acknowledged that a lot has been priced in, but a direct comparison of yield spreads and dollar indexes shows that it is not completely priced in.