The US dollar saw mixed performance on Monday, ending a six-day winning streak against the Japanese yen while snapping a three-day losing streak versus the euro, as investors brace for a busy week of major central bank decisions and global trade negotiations.

The Federal Reserve will conclude its two-day policy meeting on Wednesday, followed by interest rate decisions from the European Central Bank (ECB) and the Bank of Japan (BoJ) on Thursday.

President Donald Trump said the United States and China were close to reaching a trade deal, with a meeting between him and Chinese President Xi Jinping scheduled later this week in South Korea.

The Chinese yuan climbed to its strongest level in more than a month, reaching 7.1103 per dollar ahead of the summit. Before the market opened, the Peoples Bank of China set the official midpoint rate at 7.0881 per dollar the strongest since October 15, 2024 and firmer than Reuters forecast of 7.1146.

Focus on the ECB and Bank of Japan

The yen extended its decline for a seventh straight day against the dollar, pressured by expectations of expansionary fiscal and monetary policies under new Prime Minister Sanai Takaichi. Higher oil prices also weighed on the yen and other oil-importing currencies.

After touching 153.26 yen the highest since October 10 the dollar later eased 0.05% to 152.80 yen. Analysts expect Japans so-called fiscal premium, driven by concerns over worsening public finances, to remain high and limit the yens recovery potential.

While the ECB is expected to keep policy unchanged this week, markets are turning their attention to the Bank of Japans meeting on Thursday.

Bob Savage, head of macro strategy at BNY, said: Theres a real chance the BoJ could raise interest rates, and any hawkish guidance could spark a sharp move in the yen.

The central bank is likely to discuss whether current conditions justify resuming rate hikes amid easing recession fears, though political factors may prompt a delay.

Federal Reserve prepares for 25-basis-point rate cut

With markets fully pricing in a 25-basis-point rate cut by the Fed, investors are focused on any signals regarding the potential end of quantitative tightening (QT).

Strategists at Barclays said, The biggest market catalyst would be an immediate end to QT with hints of upcoming Treasury bill purchases to support bank reserves.

They added that such policy shifts in the past typically boosted risk assets, which now show a growing positive correlation with the dollar.

Savage of BNY added: Given tighter funding conditions and shrinking reserves, the Fed is likely to scale back quantitative tightening soon.

The dollar index was nearly flat at 98.90. The euro traded steady at $1.1628, while gaining to a new record high of 178.13 yen. The Swiss franc also hit a record high of 192.27 yen.

Strong economic data from the eurozone last week reinforced expectations that the ECB will keep rates elevated for longer, lending further support to the common currency.

Currency and commodity moves

The Australian dollar rose 0.4% to $0.6541, supported by improved risk sentiment following progress in US-China trade talks, which lifted demand for higher-yielding assets.

Mujhabeen Zaman, head of FX research at ANZ Bank, said in a podcast: We expect the US dollar to remain firm in the near term. October and December rate cuts are fully priced in, so any cautious tone from the Fed will likely support the dollar.

In digital assets, Bitcoin rose 1.8% to $115,441.69, while Ether jumped 4% to $4,227.56.

Ray Attrill, head of FX strategy at National Australia Bank, said: Were seeing a positive start to the week for risk sentiment, thanks to upbeat headlines on trade talks over the weekend. That improving risk appetite is putting mild pressure on the US dollar.