Yen Intervention Weighs on US Dollar
The US dollar weakened during Monday's trading (August 3) as investors digested the Federal Reserve's latest decision, a joint intervention by the US and Japan to support the yen, and easing geopolitical tensions in the Middle East.
The DXY dollar index fell approximately 0.2% to the 99.76 level during early US trading. The dollar remained under pressure after losing about 1.5% last week, following the Fed's decision to hold interest rates steady without providing clear policy guidance.
Additional pressure stemmed from the strengthening yen. The USD/JPY pair dipped toward 155.20 before hovering around 156.46, while EUR/USD rose toward 1.1559. Markets remain wary of potential further intervention by Washington and Tokyo.
The dollar was also weighed down by falling oil prices after President Donald Trump announced that talks with Iran regarding the Strait of Hormuz and its nuclear program would begin. Lower energy prices eased inflation concerns and reduced the demand for the dollar as a safe-haven asset.
Newsmaker Analysis: The dollar could remain under pressure as long as oil prices and US bond yields stay weak, while the threat of intervention caps gains in USD/JPY. However, a breakdown in US-Iran negotiations or hawkish comments from the Fed could trigger a rapid recovery for the dollar.
Source: Newsmaker.id