Dollar is stable after a volatile week, yen is in focus ahead of the BoJ

On Monday, the dollar stabilized against both the euro and the yen following a week marked by significant fluctuations in currency markets. Traders were closely analyzing the impact of monetary policy developments and geopolitical events.

Attention is particularly focused on the yen’s position ahead of the Bank of Japan’s scheduled monetary policy review on Friday. The yen was trading around 154.69 to the dollar, near its lowest level in 34 years recorded last week, with traders monitoring the 155 level as a potential intervention point by Japanese authorities.

The dollar index surpassed 106 points but retreated from its five-month high recorded last week. This retreat followed comments from Federal Reserve officials and higher-than-expected inflation data, which reduced expectations of interest rate cuts.

The easing of tensions in the Middle East, following Tehran’s efforts to downplay the significance of a drone attack attributed to Israel on Iran, contributed to a decrease in volatility. This development had pushed the dollar, gold, and crude oil sharply higher on Friday, negatively impacting stock markets.

Traders are awaiting a series of events, including the Bank of Japan meeting, US corporate earnings results, first-quarter GDP data in the United States, and the personal consumption expenditures index, a key inflation measure monitored by the Federal Reserve.

While expectations of global interest rate cuts have been adjusted due to reassessments of US monetary policy, projections that the European Central Bank and the Bank of England will initiate cuts by mid-year remain intact.

Two-year bond yields have surged 38 basis points this month to five-month highs above 5.0 percent.

The Chinese yuan depreciated to 7.2518 against the dollar, its lowest level since mid-November, despite support from the central bank’s daily indicator and state-owned banks.

Bitcoin rose by 2.2 percent to $66,071. The cryptocurrency completed its “halving” over the weekend, a phenomenon occurring approximately every four years aimed at reducing the rate of new bitcoin creation.