In European and US forex trading on the 28th, dollar/yen is expected to struggle to extend gains. With long-term US interest rates remaining elevated, concerns about coordinated Japanese-US intervention are expected to cap the upside.
In European and US forex trading on the 28th, dollar/yen is expected to struggle to extend gains, while euro/dollar softens and the resumption of dollar buying is expected to proceed cautiously. Expectations regarding tighter Fed policy are keeping long-term interest rates elevated, and the dollar's undervaluation is fading. As a result, dollar/yen may face limited upside.
Over the previous weekend, Iranian Foreign Minister Araghchi was reported to have proposed opening the Strait of Hormuz in exchange for the US accepting Iran's conditions, sending crude oil prices lower. While selling pressure on the dollar eased, elevated long-term US interest rates continue to support the dollar.
Developments in the Middle East and movements in long-term US interest rates are cited as points to watch going forward. The opening of the Strait of Hormuz remains uncertain, and a limited decline in crude oil prices could support dollar buying. Meanwhile, continued concerns about coordinated Japanese-US intervention are expected to remain a drag, with selling pressure on the dollar and buying pressure on the yen persisting.
The US Dallas Fed Manufacturing Index (September) is scheduled for release at 23:30 today.