Yen Under Pressure as Dollar Remains Strong, Global Markets Await US Inflation Data

The Japanese yen continued to struggle against a resilient US dollar, flirting with the psychologically significant 160 level. This renewed weakness has prompted warnings from Japanese authorities, raising concerns about potential intervention to prop up the currency. The yen’s decline has been fueled by the Bank of Japan’s decision to maintain its ultra-loose monetary policy, diverging from the tightening stance of other major central banks.

Meanwhile, the dollar index, which measures the greenback against a basket of major currencies, held near an eight-week high, supported by expectations of further interest rate hikes by the Federal Reserve. The upcoming release of the US personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, will be closely watched for clues on the future trajectory of interest rates.

The euro remained under pressure due to political uncertainty surrounding the French elections, where the far-right National Rally party is leading in the polls. The euro’s weakness, combined with the dollar’s strength, has contributed to a broader risk-off sentiment in global markets.

In China, the yuan continued to trade near a seven-month low against the dollar, weighed down by concerns about the country’s economic slowdown. The ongoing trade tensions between the US and China have also added to the pressure on the yuan.

This week, investors will be focused on the US inflation data, as well as the first US presidential debate and the first round of voting in the French elections. These events could have a significant impact on market sentiment and currency movements in the coming days.