Dollar Weakness Continues Amid Global Inflation Concerns

The US Dollar (USD) maintained its positive tone in the first half of the day but changed course early in the American session. A suspected Bank of Japan intervention on the Yen weighed heavily on the USD, causing it to lose roughly 200 pips in a matter of hours.

This move, often seen as a result of some action from the Bank of Japan (BoJ), was accompanied by another factor that contributed to the USD's weakness. The Bank of Canada (BoC) announced its monetary policy decision, leaving the policy rate unchanged at 2.25%, but Governor Tiff Macklem's speech sparked a sharp appreciation in the Canadian Dollar (CAD).

The CAD's strength weighed on the Greenback, and a bounce in stocks compounded the USD's near-term weakness. The fundamental background remains the same: Crude Oil prices remain near their recent highs following an escalation in the Middle East war, fueling concerns about mounting inflationary pressures across the globe.