Trump Admin Boosts Dollar with Surprise Intervention in Currency Market

The US dollar's recent weakness has led to a significant drop in the USD/JPY exchange rate, which has fallen below its crucial support level of 155.20.

This level was last seen on May 6, and the pair has retreated by more than 4% from its year-to-date high.

The Trump administration intervened in the currency market to support the greenback, converting a large portion of its euro holdings into US dollars.

According to the Financial Times, this transaction was carried out through Morgan Stanley and Goldman Sachs on behalf of the Federal Reserve Bank of New York.

This move came just one day after the Bank of Japan implemented a major intervention worth approximately $52.8 billion in yen.

The Trump administration's decision to intervene is driven by concerns about the impact of rising US bond yields, which could be exacerbated if Japan were to continue dumping its US treasuries to boost the value of the yen.

With the US public debt approaching the $40 trillion mark and deficits expected to hit $2 trillion, the administration hopes that this intervention will prevent a further appreciation of the yen.