Investors pare dollar positions on easing Middle East tensions, while yen strength fuels speculation of potential intervention by Japanese authorities.
The US dollar index fell 0.3% to 104.2 as reports of progress in US-Iran negotiations reduced safe-haven demand. The yen surged to 151.5 against the dollar, nearing levels that previously triggered intervention by Japan’s finance ministry in 2022 and 2023.
Markets had priced in a stronger dollar following last week’s hotter-than-expected US inflation data, which delayed expectations for Federal Reserve rate cuts. The yen’s rally contrasts with broader weakness in Asian currencies, as traders weigh the risk of official action to stabilize the currency.
Equities rose modestly in early trading, while gold prices dipped 0.5% as geopolitical risks eased. Bond yields remained steady, with the 10-year Treasury yield holding at 4.32%.