During the week of 12–16, dollar buying led against a backdrop of higher oil prices and movements in U.S. interest rates, while there were also periods toward the weekend when the dollar turned higher. USD/JPY fluctuated around ¥158 as it traded near the 200-day moving average, while EUR/USD and GBP/USD continued to move in the 1.11–1.12 and 1.32–1.33 ranges, respectively.
At the start of the week, with the Tokyo market closed on the 12th, dollar buying prevailed in the London and New York markets, and USD/JPY reached the ¥158 range at times. Higher oil prices and caution over U.S. inflation indicators drove the market, and the dollar also temporarily moved above its 200-day moving average.
However, a retreat in oil prices, falling U.S. yields and expectations of official efforts to curb yen weakness weighed on the market. The dollar's gains were again pared, and it was pushed back into the ¥157 range at the weekend. EUR/USD was slow to recover against a backdrop of concerns over France's fiscal position and expectations that the ECB would forgo a rate hike. After being sold down to the low 1.11s, it was bought back into the low 1.12s at the weekend.
GBP/USD rose into the 1.33s at times while holding 1.32 as support, and cross-yen pairs struggled to gain ground because of fiscal and growth risks in their respective markets, despite moving in line with USD/JPY. From the latter half of the week, there were also periods when dollar buying surged on the strength of the U.S. CPI data, but a sharp decline in U.S. yields again pushed USD/JPY below the ¥158 level at times, making it a volatile week for the markets.
Movements centered on USD/JPY in response to developments in the U.S. market were prominent, while fiscal and interest-rate-related news from Europe and the United States became the market's focus. Going forward, oil-price trends and central-bank policy stances may also have an impact as the dollar's underlying trend changes.