The US dollar was relatively stable on Monday after several sessions of losses, though the balance of risks continued to point lower.
Japan’s finance ministry confirmed it had bought yen jointly with the United States late last week, and Tokyo signalled its readiness for more interventions to support its currency if required.
The prospect of renewed coordinated action could cap any recovery in the greenback against the yen.
Geopolitical developments are pulling in the same direction.
President Donald Trump suggested that talks with Iran would open today after holding off further escalation, reviving expectations of a diplomatic settlement.
That has limited safe-haven demand for the dollar and sent oil prices lower, which in turn could ease inflation concerns, soften monetary policy expectations and weigh on Treasury yields.
At the same time, markets still price in an interest rate increase at the Federal Reserve’s next meeting, which could limit any decline in Treasury yields. However, expectations remain mixed, with a hold seen at a roughly 35% probability, up from 18.5% a week earlier.
Looking ahead, a heavy data calendar could also set the tone in the absence of Fed guidance. Manufacturing PMI is due today, JOLTS job openings tomorrow, the services PMI on Wednesday and non-farm payrolls on Friday. Firmer readings could rebuild monetary policy tightening bets and lift yields and the dollar, while softer prints could soften expectations.
