Most Asian currencies advanced on Monday as the U.S. dollar extended steep losses ahead of this week’s Federal Reserve policy meeting. The Japanese yen led gains in the region, jumping to a two-month high amid rising speculation of coordinated currency intervention by U.S. and Japanese authorities.
The U.S. Dollar Index slid 0.5% to its lowest level since mid-September, while dollar index futures were also down 0.5% by 06:47 GMT. The continued weakness reflected growing caution among investors ahead of key central bank signals.
Yen jumps on U.S.–Japan intervention concerns
The yen strengthened sharply, with the USD/JPY pair falling more than 1% to around 154 in early Asian trading, following a 1.7% plunge on Friday. These moves lifted the Japanese currency to its strongest level since late November and triggered aggressive short covering after weeks of heavy bearish positioning.
Market attention remained firmly focused on intervention risks, after officials in the United States and Japan signaled close coordination on foreign exchange developments.
Speculation of joint action intensified after U.S. authorities were reported to have checked exchange rates with market participants, a step often viewed as a potential precursor to intervention. Japanese officials also reiterated warnings against excessive and disorderly currency moves.
The yen’s rebound marked a sharp turnaround from recent weakness that had accelerated after the election of Prime Minister Sanae Takaichi. Expectations of increased fiscal spending and continued loose monetary policy under her administration had weighed heavily on the currency, pushing it to more than 18-month lows earlier in January.
Asian currencies mostly higher
Elsewhere in Asia, the South Korean won strengthened, with USD/KRW down 0.4%. China’s onshore yuan also edged higher, with USD/CNY slipping 0.1%.
The Singapore dollar extended recent gains, pushing USD/SGD down 0.3% to its lowest level since September 2014. The Indian rupee edged 0.2% higher, although it remained close to record lows near 92 per dollar touched in the previous session.
The Australian dollar also gained ground, with AUD/USD rising 0.3% on the day.
Dollar pressured ahead of Fed decision
The dollar remained under pressure ahead of the Federal Reserve’s two-day policy meeting, which concludes on Wednesday. Markets broadly expect interest rates to remain unchanged, but investors are closely watching guidance from Chair Jerome Powell for clues on the timing and pace of potential rate cuts later this year.
Analysts at ING said their base case remains rate cuts at the March and June meetings, though delays of several months remain a key risk.
Traders are also monitoring expectations around an upcoming announcement from Donald Trump on his nominee for the next Federal Reserve chair. Any indication of pressure for a more dovish policy stance has added further downside pressure on the dollar.
