On Wednesday, the dollar remained under pressure following substantial declines against the euro and sterling. This was attributed to robust European activity data and a slowdown in U.S. business growth.
Despite concerns from Japanese officials about the yen nearing a 34-year low against the dollar, the currency continued to struggle. The dollar index, which measures the dollar against major peers, was flat at 105.64 in early Asian trading after a 0.4% drop overnight.
The euro held steady at $1.069975 after a 0.45% increase, buoyed by strong euro zone business activity data. Similarly, sterling remained stable at $1.24485 following a 0.79% jump driven by robust British business activity and comments from the Bank of England Chief Economist.
In contrast, U.S. business activity softened in April, leading to a four-month low, while inflation rates eased slightly, potentially offering some relief for the Federal Reserve.
Investors are closely watching Friday's release of the Fed's preferred consumer inflation measure, with markets currently pricing in a 73% chance of a rate cut by September.
Elsewhere, the Australian dollar traded near its highest level since mid-April ahead of consumer inflation figures, rebounding more than 1% over the past two days.
Despite the dollar's recent struggles, it briefly reached a fresh 34-year high against the yen at 154.88. Concerns about potential dollar-selling intervention by Japanese authorities kept traders cautious.
Japanese Finance Minister Shunichi Suzuki issued a strong warning about intervention, emphasizing last week's discussions with U.S. and South Korean counterparts.
The Bank of Japan is expected to maintain its policy settings at its upcoming meeting, despite speculation about tightening policy again this year.
Rabobank strategist Jane Foley highlighted the risks of FX intervention, noting its success is often tied to favorable currency fundamentals. She suggested that the dollar may not weaken against the yen until later in the year, contingent on Fed rate cuts in September.
Paraphrasing text from "Investing" all rights reserved by the original author.
