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Dollar slides to weakest levels since mid-June as USDJPY falls
USDJPY hit its lowest since early May, with an estimated $54 billion intervention on the first of three days and Treasuries sold alongside the dollar.
The US dollar logged its worst monthly performance since April as speculators pared record net long positions in the greenback, Action Forex reported. The USD index weakened even as Treasury yields stayed high, pointing to fading confidence in current US and Fed policy expectations.
Over three trading days, USDJPY plunged to its lowest level since early May, after what was estimated at $54 billion of intervention on the first day. The report also said investors are concerned about US involvement in currency interventions coordinated with Japan.
The US Treasury signaled it could return to forex markets, with Treasury Secretary Scott Bessent saying the Treasury would not hesitate to re-enter, while Donald Trump called the intervention a sign of friendship with Tokyo. Meanwhile, the Bank of Japan kept its overnight rate at 1%, and commentary from officials was read as increasing the odds of tighter policy earlier than December.
Action Forex added that the dollar’s losses have coincided with a sell-off in Treasuries and pressure from shifting Middle East policy expectations, including Trump calling off planned strikes against Iran to pursue negotiations. It noted that easing oil prices from the diplomacy shift has weighed on the greenback.