Dollar Hits Six-Week Low Amid Stabilized Yen and Reduced Safe-Haven Demand

The Japanese yen has stabilized after a historic intervention by Tokyo and Washington, which saw joint purchases of the currency on Friday. The dollar traded near six-week lows against other currencies, as investors became less inclined to buy dollars due to revived hopes of an end to the war in Iran.

U.S. Treasury Secretary Scott Bessent echoed former European Central Bank President Mario Draghi's pledge from 2012, stating that the U.S. would do 'whatever it takes' to support Japan's efforts to stabilize the yen.

However, market strategists are skeptical about the effectiveness of intervention in the longer run, with CIBC Capital Markets head of G10 FX strategy Jeremy Stretch saying that it is a 'containment exercise' unless three criteria are met: more aggressive rate hikes from the Bank of Japan, markets pricing in lower chance of rate increases from the Federal Reserve, and a lower oil price.