Dollar Dips After Week of Gains: Yen Near 40-Year Low and BOJ Rate Risks

The dollar retreated from a one-week high after four consecutive days of gains, while the yen hovered near its lowest level in nearly four decades. Markets focused on the likelihood of Tokyo intervention and faster rate hikes by the Bank of Japan (BOJ). The dollar's rise correlated with increased tensions in the U.S.-Iran conflict and a reversal in oil prices. The dollar index fell 0.08% to 101.10, while the yen strengthened to 163.04 per dollar. BOJ sources warned of potential faster rate hikes than market expectations. The yen's decline reflects broader economic uncertainty in Japan under Prime Minister Sanae Takaichi.

The yen's 40-year low underscores Japan's policy ambiguity, with BOJ's potential intervention risks forcing markets to reassess growth expectations.