Dollar Crumbles as Treasury Yields Surge Amid Japan's Intervention

The US dollar suffered a sharp selloff on Thursday as long-term Treasury yields spiked. The US Dollar Index (DXY) dropped by 0.9% to 99.99, its lowest point in weeks.

This decline marks the dollar's third consecutive day of losses and is on track for a weekly drop of over 1%. Despite being up nearly 2% year-to-date, market watchers attribute this downturn to possible Japanese intervention to prop up the yen, which recently reached a four-decade low against the greenback.

Roberto Cobo ‌Garcia, head of G10 FX strategy at BBVA, stated that 'There has been a sharp move lower in dollar/yen that strongly suggests official intervention.' This suggests Japanese authorities have taken advantage of the bearish momentum generated by weaker U.S. data to sell dollars and support the yen.

The 20- and 30-year Treasury yields have accelerated toward the end of the week, firming above 5.2% for the first time since the early days of the Global Financial Crisis almost 20 years ago. Meanwhile, investors are pricing in higher-for-longer interest rates for the rest of 2026.