Dollar under pressure from US yields and Japanese authorities

Dollar fell in European trade on Monday against a basket of major rivals, resuming gains after a hiatus on Friday and approaching two-week lows as US 10-year treasury yields slowed down. 

The greenback is also pressured by the Japanese government’s intervention to support the yen after tumbling below 160 per dollar for the first time since 1990. 

The Index

The dollar index fell 0.6% to 105.46, with a session-high at 106.09, after closing up 0.5% on Friday away from a two-week trough at 105.41. 

The dollar also gained ground after hot US personal spending data for March. 

The data raised pressures on Fed policymakers and reduced the odds of a Fed interest rate cut in June and July. 

US Yields

US 10-year treasury yields fell 1% on Monday, extending losses for the second day away from five-month highs at 4.739%, and in turn pressuring the greenback and hurting its standing. 

The developments come ahead of the Federal Reserve’s policy meeting this week, expected to offer fresh clues on the future of US interest rates this year. 

 US Rates

Following US personal spending data on Friday, the odds of a 0.25% Fed interest rate cut in June fell to just 12%, while the odds of such a cut in July fell to 32%.

Japanese Authorities 

Yen surged 2.5% against the dollar in European trade today away from earlier 34-year lows at 160.21. 

The surge came as Japanese authorities intervened to support the local currency, which demarcates 160 as the barrier that the Japanese government won’t let the price pass through.