Dollar’s Yen Advance Halted by Intervention Fears

The dollar’s relentless ascent against the yen faced a speed bump on Tuesday, as traders cautiously avoided breaching the 160 yen threshold due to growing concerns about potential intervention by Japanese authorities.

Meanwhile, Bitcoin, the leading cryptocurrency, experienced a partial rebound after suffering its worst single-day loss in over two months at the start of the week. Analysts attributed this bounce-back partly to a reduction in outflows from Bitcoin exchange-traded funds (ETFs).

Yen Holds Ground Amid Intervention Concerns

The dollar’s advance against the yen stalled, with the exchange rate hovering around 159.42 yen after a tight trading range throughout the Asian session. Traders were wary of pushing the dollar past the critical 160 yen mark, a level that previously triggered a substantial intervention by Tokyo to bolster the yen.

This apprehension prevented the yen from hitting new lows against other major currencies, such as the British pound, which remained just below a 16-year high at 202.38 yen. The Australian dollar also retreated from a 17-year peak against the yen.

Market analysts highlighted the heightened nervousness among traders regarding the yen’s weakness. The risk of a sudden, sharp drop in the dollar-yen exchange rate due to potential intervention has made shorting the yen an increasingly risky proposition.

Bitcoin Rebounds After Recent Slump

Bitcoin staged a recovery, jumping over 3% to $61,319, following its steep decline of 6.65% in the previous session, which had pushed it to a one-month low. The rebound was partially attributed to a decrease in outflows from Bitcoin ETFs.

Broader Market Dynamics and Political Landscape

The dollar eased slightly against a basket of currencies ahead of the upcoming release of the U.S. personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, on Friday. The data is expected to provide insights into the trajectory of U.S. interest rates.

Political events also captured investors’ attention, with the first U.S. presidential debate between President Joe Biden and former President Donald Trump scheduled for Thursday, and French elections set to commence over the weekend. The euro, which has been under pressure due to political turmoil in France, gained slightly but remained on track for a monthly loss of about 1%.

Key Points:

• Dollar’s advance against the yen stalled near the 160 level due to intervention fears.
• Bitcoin recovered some losses after a sharp decline, partly due to reduced ETF outflows.
• Markets await U.S. PCE inflation data for clues on interest rates.
• Political events, including the U.S. presidential debate and French elections, are in focus.

Overall, the global markets remain in a state of flux, with traders closely monitoring currency movements, cryptocurrency trends, and political developments. The yen’s resilience against the dollar and Bitcoin’s partial recovery signal a cautious sentiment among investors as they navigate the uncertain economic and political landscape.