Dollar is recovering and yen is approaching the 155 level against the dollar

The dollar showed signs of recovery on Wednesday after facing significant losses against the euro and pound the day before, while the yen remained near its lowest level in 34 years, despite intensified warnings from Japanese officials about potential intervention to support the currency.

The dollar index, which gauges the dollar’s performance against a basket of six major currencies including the euro, pound, and yen, rose by 0.2 percent in the latest trading session, reaching 105.84. This came after touching its lowest level since April 12 at 105.59.

The index had experienced a decline on Tuesday, partly due to stronger-than-expected data on European economic activities and a slowdown in business growth in the United States.

While the euro fell by 0.1 percent to $1.0688 after a 0.4 percent increase on Tuesday, following data indicating robust business activity growth in the eurozone, the pound also saw a slight decrease of 0.1 percent to $1.2431 after a notable 0.8 percent surge in the previous session, supported by data showing accelerated business growth in the UK.

In contrast, business activity in the US slowed in April, hitting its lowest level in four months due to declining demand, while inflation rates stabilized somewhat.

The dollar index had reached a 5.5-month peak of 106.51 last week, propelled by persistently high inflation figures, prompting Federal Reserve officials to suggest that there was no immediate need to rush into interest rate cuts.

As the dollar recovered, it climbed to a new 34-year high against the yen, reaching 154.98. Throughout the week, the dollar and yen traded within a narrow range, fluctuating between this high and the 154.50 level. Traders remained cautious amid concerns that the yen’s decline beyond 155 against the dollar could trigger Japanese officials to intervene by selling the dollar to support the currency. The dollar was last trading at 154.905 yen.