U.S. Dollar Falls as Yen Intervention Risk Rises: The U.S. dollar declined for a fourth straight session, falling to a four-month low, as investors closely watched the upcoming Federal Reserve policy decision and growing speculation over possible coordinated currency intervention by the United States and Japan.
The greenback has remained under pressure amid rising uncertainty surrounding U.S. President Donald Trump’s economic policies, renewed concerns about Federal Reserve independence, and fears of another U.S. government shutdown due to political disputes over Department of Homeland Security funding.
Trade tensions added to market volatility after Trump threatened higher tariffs on South Korean imports, including automobiles, lumber, and pharmaceuticals, raising duties to 25%. The president also warned of a 100% tariff on Canada if it proceeds with a trade agreement with China.
Currency Markets React
The South Korean won strengthened 0.45% to 1,439.14 per dollar, while the dollar index dropped 0.48% to 96.64, hovering near a three-and-a-half-year low.
“Economic policy uncertainty is once again driving a strong ‘Sell America’ trade,” said Karl Schamotta, Chief Market Strategist at Corpay, adding that investors remain cautious amid ongoing volatility.
Federal Reserve in the Spotlight
Market participants are now focused on the Federal Reserve’s two-day meeting, with expectations that interest rates will remain unchanged. However, analysts warn that the political response to the decision could move markets.
Nick Rees, Head of Macro Research at Monex, said the biggest risk lies not in the Fed’s decision itself, but in potential political backlash from President Trump, including the possibility of naming a successor to Fed Chair Jerome Powell.
Yen Intervention Watch Intensifies
Attention has also turned to the Japanese yen, which has gained nearly 3% in recent sessions amid speculation of U.S.-Japan currency coordination. The yen strengthened to around 152.96 per dollar, its strongest level in months.
Although no official intervention has been confirmed, reports indicate the New York Federal Reserve recently conducted rate checks, a move often seen as a precursor to currency market action. Japanese officials have also confirmed close coordination with U.S. authorities.
According to BNP Paribas strategist Parisha Saimbi, potential U.S. involvement suggests multiple parties may be prepared to intervene, a notable shift from past intervention efforts.
Other Major Currencies Strengthen
- Euro rose 0.7% to $1.19635, the highest since June 2021
- British pound gained 0.8% to $1.3786, its strongest since October 2021
- Australian dollar climbed 0.8% to $0.69705, a two-year high
Conclusion of U.S. Dollar Falls as Yen Intervention Risk Rises
The continued weakness in the U.S. dollar, combined with rising trade tensions, political uncertainty, and speculation over currency intervention, highlights growing unease in global markets. As investors await clarity from the Federal Reserve, attention remains firmly on how policymakers in Washington and Tokyo may respond to mounting currency volatility in the days ahead.
What Do You Think?
Q: Do you think potential U.S.–Japan currency intervention and ongoing political uncertainty will continue to pressure the U.S. dollar in the coming weeks?
💬 Comment boxes are open for your answers.
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