Dollar/yen is expected to face upside pressure around the ¥157 level tonight, against a backdrop of concerns about coordinated Japan-U.S. intervention. Expectations of the Strait of Hormuz reopening could also become a factor driving dollar weakness and yen strength, according to reports.
In the Tokyo market, dollar/yen temporarily fell to around ¥157.30 before recovering to the ¥157.70 range. Concerns about intervention remain in the market, with the pair's limited upside drawing attention.
The expected dollar/yen range during European and U.S. trading hours is 156.600-158.500, with intervention concerns and developments in Middle East risks expected to influence trading.
The U.S. market is scheduled to release the July ADP national employment figures and the ISM non-manufacturing index, cited as key indicators for August. The dollar's direction could depend on the results.
Market participants have pointed to expectations of the Strait of Hormuz reopening as a potential factor driving dollar weakness and yen strength, while concerns about coordinated Japan-U.S. intervention remain a significant constraint.
Key events to watch tonight include a speech by Federal Reserve Governor Cook and the EIA inventory statistics.