US Dollar to Retain Strength Amid Yen Intervention

The US dollar is expected to remain strong in coming months before weakening later in the year. According to FX strategists surveyed by Reuters, nearly 95% of respondents said future Japanese yen interventions alone would not sustainably curb the currency's weakness.

Nearly every respondent who said that also agreed that the Bank of Japan (BOJ) would have to raise interest rates to make a lasting impact. However, so far, the BOJ has been reluctant to raise borrowing costs quicker than once every six months due to a weak economy.

Despite interventions from Tokyo and coordinated action with Washington in recent days, the yen rallied about 4% against the dollar but failed to reclaim its peak from the previous intervention by the Japanese authorities in May.

The US dollar is currently trading at around $158 per yen, and median forecasts show it weakening to $159 in three months before gaining to $157 in six and $154 in a year as the dollar declines.