Financial markets are preparing for important monetary policy decisions in the United States and Japan this week as rising inflation and higher oil prices increase pressure on central banks.

The US dollar strengthened on Monday while the Japanese yen remained close to a seven month high. Investors are closely watching the upcoming meetings of the US Federal Reserve and the Bank of Japan for signals about their next policy decisions.

Oil prices have moved above 100 dollars a barrel amid continuing tensions in the Middle East. The increase has added to inflation concerns and made the outlook for interest rates more uncertain.

Recent US inflation figures have also increased expectations that the Federal Reserve could raise interest rates. Investors are now paying close attention to economic data and comments from policymakers before the decision.

In Japan, markets are watching for signs that the central bank could move toward a tighter monetary policy. A stronger signal from the Bank of Japan could support the yen, while a less aggressive approach could put renewed pressure on the currency.

The decisions from both central banks are expected to influence currency markets, borrowing costs and investor sentiment across the global economy.