Joint currency interventions by Japan and the US triggered dollar weakness, shifting focus to upcoming US CPI data and Fed policy.
The euro surged above 1.15 against the dollar as coordinated yen interventions by Japan and the US sparked broad-based dollar selling. Reports confirmed the US Treasury participated in the first joint operation since 2011, with officials signaling readiness for further action if needed.
USD/JPY retreated to levels last seen in April-May, reducing near-term intervention risks. Market attention now turns to US inflation data and geopolitical developments, with a hot CPI report likely cementing a September Fed rate hike. The ECB held rates steady but hinted at a potential September hike if inflation worsens.
Fundamentals remain largely unchanged, though easing inflation concerns or US-Iran de-escalation could keep the dollar under pressure. Conversely, heightened tensions or stronger inflation may support the greenback on Fed tightening expectations.