Joint US-Japan currency intervention and softer oil prices weigh on the USD, though Fed rate hike expectations limit losses.
The US Dollar Index (DXY) retreated to around $77.50 in early Asian trading Tuesday, reversing three days of gains. The decline follows confirmed joint FX intervention by US and Japanese authorities, with Japan estimated to have sold $70-80 billion in USD over the past three days to support the yen.
Prior to the drop, the DXY had held firm despite softer oil prices and reduced geopolitical tensions after the US signaled a pause in military action against Iran. Analysts noted that expectations for a Federal Reserve rate hike continue to underpin the dollar’s broader resilience, offsetting traditional headwinds.
Market sentiment improved slightly after President Trump indicated diplomatic progress with Iran, easing risk aversion. However, traders remained cautious amid mixed signals on monetary policy and currency interventions.