Yen Drops to Multi-Year Lows Against Dollar and Euro
The Japanese yen weakened significantly against the U.S. dollar and euro on Tuesday, reaching multi-year lows. This decline has heightened investor expectations of Japanese intervention ahead of the Bank of Japan's policy meeting this week.
The euro reached its highest level since 2008 against the yen, driven by data indicating a faster pace of business activity in the eurozone. The dollar also climbed to a 34-year peak against the yen, nearing the 155 level that market participants view as a potential trigger for Japanese intervention.
Analysts believe that the Bank of Japan will likely maintain its current policy stance at its upcoming meeting, potentially leading to further yen weakness. However, there is a possibility of market intervention to prevent a more significant decline towards 160.
Earlier this week, Japanese Finance Minister Shunichi Suzuki hinted at the possibility of intervention, stating that a recent meeting with his U.S. and South Korean counterparts laid the groundwork for action against excessive yen movements.
Meanwhile, the dollar index fell after data showed a slowdown in U.S. business activity in April. The euro, on the other hand, climbed to a two-week peak against the dollar and the pound.
In the United States, investors anticipate the Federal Reserve to be one of the last major central banks to cut interest rates. This expectation has contributed to the dollar's recent strength.
Key economic data releases this week, including U.S. GDP and PCE inflation figures, will provide further insights into the strength of the U.S. economy and potentially influence the Fed's policy decisions.