The Japanese yen edged down on Tuesday due to traders' last-minute uncertainty about the Bank of Japan's (BOJ) potential rate hike this week.

Meanwhile, other major currencies remained stable as attention was also on upcoming meetings of the Bank of England and the Federal Reserve.

The Dollar rose 0.6% against the Yen, reaching 154.93, and the Euro similarly increased to 167.59 Yen.

The Bank of Japan's two-day policy meeting is currently in progress, with the rate decision set to be unveiled on Wednesday. There is significant anticipation that the BOJ will declare a rate increase, following its March hike, which was the first in 17 years.

As it stands, markets are pricing in just over a 50% chance of a 10-basis point rate rise, Reuters reports.

“The market certainly has been quite excited about a rate hike, but economists and Bank of Japan watchers are far less certain,” stated head of FX strategy at Rabobank, Jane Foley.

“Everybody sees a risk of a move, but the surveys are suggesting only about 30% of economists are thinking that the economic conditions are ripe for a move as soon as tomorrow and I think that is probably what's been weighing on the Yen versus the US Dollar this morning.”

The significant gap between Japanese interest rates and those of other countries has negatively impacted the Yen, causing it to plummet to near 38-year lows earlier in July. 

However, several factors have since contributed to its recovery.

These include probable official intervention, a sell-off in equities prompting investors to exit risk positions, and a reassessment of previously popular carry trades.

Elsewhere on Tuesday, preliminary inflation data from European countries had minimal impact on the Euro, which was up 0.08% against the Dollar at $1.0827.

Furthermore, Sterling remained steady against the Dollar at $1.2858, as investors were cautious about making significant bets ahead of the Bank of England's meeting on Thursday.