The dollar held firm in New York foreign exchange trading. Dollar buying prevailed against the backdrop of rising U.S. long-term yields, with dollar-yen climbing as high as 159.03 yen. The U.S. 10-year Treasury yield advanced from 4.69% to 4.74%, reinforcing investor preference for the dollar.
NYMEX WTI crude futures held steady in the $87-per-barrel range, drawing attention to the dollar’s relative strength against commodity-exporting currencies. Persistently elevated crude prices suggest sustained inflationary pressure, which tends to fuel expectations that the Federal Reserve will maintain its high-rate policy for longer. This dynamic supports the dollar through the channel of rising U.S. yields.
Dollar-yen rose from 158.63 yen to 159.03 yen. In the previous day’s Tokyo session, the pair had been locked in choppy two-way trading around the psychologically significant 159-yen level, but in New York trading the pair tested the upside in tandem with rising U.S. yields.
Euro-dollar pulled back from $1.1703 to $1.1669 before staging a sluggish recovery to around $1.1680. The euro showed resilience against the dollar at times during European trading, but once New York trading got underway, the dollar was bought back on the back of rising U.S. yields, capping the euro’s upside.
GBP/USD declined from $1.3660 to $1.3619 before finding a floor at $1.3549. The pound’s weakness against the dollar stood out relative to other major currencies, with uncertainty over the U.K. economic outlook likely weighing on the currency.
Flow from European Trading
Dollar-yen began European trading on a soft note, briefly sliding to 158.34 yen. The U.S. 10-year Treasury yield stalled in the 4.68% range, tilting the balance toward dollar selling. NYMEX WTI crude also softened to around $86, reinforcing the dollar-selling bias.
However, once U.S. yields stopped falling, dollar-yen recovered to around 158.60 yen. As NYMEX WTI crude firmed into the $87 range, buybacks in the dollar became easier to trigger. The European trading range for dollar-yen was 158.34 to 158.77 yen, euro-yen traded between 185.44 and 185.74 yen, and euro-dollar ranged from $1.1689 to $1.1711.
Tokyo Market Conditions
In afternoon Tokyo trading on the 21st, dollar-yen saw two-way flows around the key 159-yen level. While NYMEX WTI crude’s stall in the low-$86 range created a mild bias toward dollar selling, the U.S. 10-year Treasury yield’s firm footing at 4.70% made the dollar difficult to sell.
The Tokyo trading range for dollar-yen was 158.86 to 159.13 yen, euro-yen traded between 185.67 and 185.95 yen, and euro-dollar ranged from $1.1678 to $1.1700. After breaking above the 159-yen level in Tokyo, dollar-yen corrected to the mid-158-yen range in European trading before reclaiming the 159-yen level in New York.
Market Focus
Among market participants, the prevailing view is that U.S. long-term yield movements will continue to dictate dollar-yen direction. The key question is whether the U.S. 10-year Treasury yield can maintain its footing above 4.70%; if yields climb further, dollar-yen could consolidate above the 159-yen level.
Meanwhile, persistently high crude prices represent a double-edged sword for the dollar. Higher oil prices amplify inflationary pressure and narrow the Fed’s room to cut rates, which supports the dollar. At the same time, however, elevated crude prices worsen the terms of trade for energy-importing nations, potentially triggering risk-averse yen buying through concerns over a global economic slowdown.
On the upside for dollar-yen, market sources note that sell orders from Japanese exporters are observed into the mid-159-yen range, which is likely to keep the pace of gains measured. On the downside, real-demand buying is expected to emerge in the low-158-yen range. The dominant view is that a range-bound market between the 158-yen and 159-yen levels will persist for the time being.
For euro-dollar, the focus is on whether the pair can reclaim the $1.17 level. Direction is likely to be sought while monitoring the European Central Bank’s monetary policy stance and U.S. yield movements. GBP/USD is showing signs of bottoming in the $1.35 range, but the recovery has been sluggish, and depending on upcoming U.K. economic data, further downside testing remains a possibility.
finance.biggo.com