Dollar steadies, keeps yen pinned near 40-year lows

NEW YORK - The Japanese yen struggled near four-decade lows on Monday, raising the risk of official intervention, while the dollar steadied after last week's soft jobs report reduced the odds of an imminent interest rate hike by the U.S. Federal Reserve.

The yen last traded around 162.07 per dollar, just above last week's low of 162.84, which was the weakest level since 1986, leaving traders nervous after a sudden surge in buying briefly lifted the currency on Thursday.

The dollar found its feet after having posted its worst weekly performance since April last week, weighed down by a U.S. payrolls report that showed job growth slowed sharply in June. That data, together with weaker oil prices, curbed market expectations for a rate increase this month.

Data showed that U.S. employers added just 57,000 jobs in June, far below expectations. Some economists said the worse-than-expected slowdown in job growth was likely a delayed response to the Middle East conflict, which has raised gasoline prices and boosted inflation.

Investors are now looking ahead to the release on Wednesday of the minutes of the U.S. central bank's June 16 to 17 meeting for clues about the rate outlook.

New Fed Chairman Kevin Warsh has given little away so far, other than to say last week that anyone thinking the U.S. central bank may go easy on inflation, which he acknowledged had cooled recently, could be "disappointed."

Still, it remains to be seen whether other Fed officials agree, said David Scutt, strategist with City Index.

"Waller, for example, argued only a few months ago that you'd have to be 'crazy' to consider cutting rates. Will he provide another similarly definitive signal? That's what traders should be watching for," Scutt said, referring to Fed Governor Christopher Waller.

The dollar index, which tracks the performance of the U.S. currency against six peers, hit a 13-month peak last week, but has since retreated as expectations for a rate hike at the Fed's July 28 to 29 meeting have faded. It was last trading at 100.86.

"The risk-reward is no longer as one-sided as it was only a week ago," Scutt said.

YEN VIGIL

The yen remained firmly in the spotlight, as the threat of official intervention by the Tokyo authorities kept traders on edge, although analysts doubted that any such move would deliver lasting support.

Moh Siong Sim, currency strategist at OCBC, said the market is still contending with hawkish Fed risk, which is a negative for the yen. However, concerns about potential intervention have stemmed further weakness in the currency.

"In the near term, I would expect the yen to remain under pressure," he said.

Investors are also concerned about Japanese officials abandoning their habit of telegraphing risks, instead signaling a more targeted campaign to squeeze speculators and raise the cost of betting against the yen.

Ben Bennett, head of investment strategy for Asia at L&G Asset Management, expects Japanese authorities to intervene if currency volatility increases, but said "the direction of travel is a function of easy domestic fiscal policy and the big interest-rate differential with the U.S."

"I don't think intervention will change that," he said.

The euro traded at $1.144, up 0.08% and not far off two-week highs, while sterling was up 0.33% at $1.3396.

(Additional reporting by Ankur Banerjee in Singapore and Rushil Dutta; Editing by Shri Navaratnam, Kevin Buckland, Paul Simao and Edmund Klamann)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published July 6, 2026 at 3:56 PM.