The US Dollar Index sits near a seven-week low while USD/JPY has rebounded to around 159 after coordinated intervention pulled it back from a multi-decade high. Traders now weigh a possible Bank of Japan hike against just a 25-30% chance of a Fed move, leaving both currencies at a technical crossroads.
The yen sank to a 40-year low, pushing USD/JPY to a multi-decade high of 163.99, before coordinated intervention by Japan and South Korea, and possibly the United States, sent the pair back down to around 159. The US Dollar Index has slipped to a seven-week low over the same stretch, even though it remains the world's reserve heavyweight.
Intervention snaps the yen's slide
Japanese and South Korean authorities intervened in late July, and the yen spiked while the dollar retreated. The move capped a run in which USD/JPY had climbed to its multi-decade high before reversing toward current levels.
USD/JPY at a technical crossroads
The Bank of Japan held rates steady, but traders now price in a 50%+ chance of a rate hike, adding fresh volatility to the pair. Market watchers view 155 as a "line in the sand" for further intervention, while 160 is seen as a psychological ceiling.
Short-term technicals on USD/JPY are flashing "strong buy" on the one-hour chart, yet the daily chart has turned "neutral" — a classic sign of indecision after intervention.
Fed odds and other majors
Markets see only a 25-30% chance of a U.S. rate hike, and a dovish surprise from the Fed could weaken the dollar further. Elsewhere, EUR/USD is trending sideways, with neither currency holding a clear upper hand, while GBP/USD shows a slight upward drift that has not been enough to challenge the dollar's dominance.
Source: Investing.com
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