US Dollar Resilient Despite US-Japan Intervention as Sterling and Euro Slip

<>

The US dollar maintained its resilience against major currencies on Monday, defying downward pressure from lower oil prices and a confirmed coordinated currency intervention by Washington and Tokyo to support the yen. According to foreign exchange markets, the greenback held firm as persistent expectations of Federal Reserve interest rate hikes offset the impact of central bank actions.

Dollar Resilience Defies Interventions and Oil Declines

At 09:55 GMT, the GBP/USD exchange rate fell 0,15% to 1.3462, while EUR/USD slipped 0,03% to 1.1526, according to market data. The dollar’s ability to hold its ground surprised traders following confirmation that American and Japanese authorities engaged in coordinated dollar sales to prop up the yen, with Tokyo estimated to have sold between 70 and 80 milliards de dollars over a three-day period.

“In theory, the dollar should be globaly weaker today,” said Chris Turner, global head of markets at ING, pointing to the intervention and falling oil prices. Oil prices retreated following reports that US President Donald Trump preferred negotiation over military action with Iran. “The arguments in favour of a sustained dollar sell-off remain to be demonstrated,” Turner added.

Fed Rate Expectations and Upcoming Employment Data

The currency’s strength stems from enduring market expectations regarding Federal Reserve monetary policy. Investors briefly priced in fewer than 10 basis points of tightening for September following Federal Reserve Chair Kevin Warsh’s press conference, before a hawkish repricing pushed expectations back to 16 to 17 basis points. US 30-year Treasury yields remained above 5,20%, and the 30-year mortgage rate climbed to 6,75%.

Analysts note that the Fed’s trajectory depends heavily on upcoming US employment data releases. Markets are tracking JOLTS job openings, ADP employment figures, and non-farm payrolls, where consensus expectations point to an increase of +75.000 à 80.000 jobs. Turner indicated that this anticipated figure is likely not weak enough to completely rule out a Fed rate hike. Monday’s release of the July ISM manufacturing index provides the initial data signal for the week.

Sterling and Euro Movements Driven by External Dynamics

The pound’s decline stemmed primarily from broad dollar dynamics rather than domestic UK fundamentals, with no significant economic or political catalysts emerging locally on Monday. ING analysts noted that if the DXY dollar index breaks back above 100—having found support near 99.35—it would exert moderate downward pressure on cable, though major movements remain unlikely without a domestic data surprise.

Meanwhile, the euro underperformed despite supportive conditions, including strong eurozone economic data, lower oil prices, and massive dollar-selling efforts by Japan. Turner suggested that the US Treasury may have sold EUR/JPY pairs to avoid explaining direct dollar sales to the domestic public, utilizing roughly 13 milliards de dollars in euro-denominated foreign exchange reserves held within the Exchange Stabilization Fund.

ING established strategic pivot points for EUR/USD at 1.1615 on the upside and 1.15 on the downside, noting that the Federal Reserve’s September policy decision will dictate which threshold the pair reaches first. The baseline projection from ING anticipates the DXY index returning above 100 if non-farm payrolls align with consensus, whereas a reading below 50.000 jobs would be required to shift the prevailing bearish outlook on the dollar.

>