The dollar index hovered near 100 on Friday after falling for three consecutive sessions and was set for a weekly loss of more than 1%. The move reflected pressure from the Federal Reserve’s cautious policy stance and suspected intervention by Japanese authorities to support the yen.
The greenback slumped as much as 3.3% against the yen on Thursday amid widespread expectations that Tokyo had once again entered the foreign exchange market. At the same time, US Treasury Secretary Scott Bessent described the yen as “very undervalued” and warned that excessive currency volatility is unhealthy.
This week, the Fed left interest rates unchanged despite growing inflationary risks linked to renewed conflict in the Middle East, though three FOMC members dissented in favor of a rate increase. Futures markets continue to imply roughly a 63% probability of a 25-basis-point Fed rate hike in September.
