FUNDAMENTAL OVERVIEW USD: The US dollar sold off across the board in the final part of last week.
The initial weakness came from the FOMC rate decision as the extra dissent from Fed’s Kashkari wasn’t taken as a major hawkish surprise
On Thursday, we had heavy dollar-selling flows stemming from interventions by Japan and South Korea. The losses then extended on Friday when reports confirmed that US Treasury participated in the intervention, the first joint operation since 2011. Moreover, both Japan’s Ministry of Finance and US Treasury Secretary Bessent have said that they will not hesitate to conduct more joint interventions in the future.
Given that USD/JPY is now trading around April-May levels, there’s a low probability of another intervention in the near-future, so the greenback should go back trading on fundamentals. Overall, the fundamentals haven’t changed much, so it’s just about waiting for the US CPI and further US-Iran developments. A de-escalation would keep the greenback under pressure on easing inflationary worries and lower rate hike probabilities.