Investing.com — Sterling and the euro edged higher against the dollar on Friday after suspected Japanese currency intervention sent ripples through thinly traded markets, though analysts warned the greenback’s retreat was unlikely to last.
As of 04:40 ET (08:40 GMT), rose 0.04% to 1.3606, while gained 0.11% to 1.1744.
Market participants widely believe Tokyo authorities sold dollars in on Thursday, with ING’s Chris Turner calling it the opening salvo of what could prove a lengthy intervention campaign to keep the pair under 160.
The playbook mirrors 2024, when Japan deployed over $30 billion across two operations in late April and early May, dragging USD/JPY to 152, though the pair surpassed its prior high just two months later.
With public holidays thinning liquidity across Japan and Europe, investors are bracing for follow-up action early next week.
Turner cautioned against reading too much into the dollar’s pullback. Iranian hardliners have shown no signs of conciliation, and the dip in may prove short-lived.
ING expects to find support near 98.00 and drift back to 98.50, with a sustained dollar bear trend unlikely until there is greater clarity in the Gulf.
Friday’s US focus falls on the April manufacturing ISM and a TV appearance from Fed governor Stephen Miran, the first Fed speaker after this week’s split FOMC decision. Though Miran is expected to sound dovish, Turner noted that rising inflation expectations and a more cautious Fed mean markets will struggle to price in fresh easing until oil turns materially lower.
For the euro, ING said Thursday’s ECB meeting had limited impact on the single currency, with the 10 basis point drop in short-dated EUR swap rates attributed more to oil than to any policy signal.
A June ECB rate hike remains priced at around 90%, and ING favours EUR/USD holding within a 1.1650-1.1750 range near term.
Sterling’s picture remains murky. Turner argued the BoE is laying the groundwork for a June hike, even as some in the market took Thursday’s communication as dovish, a read he attributed largely to the oil-driven fall in GBP swap rates rather than any shift in guidance.
ING flagged support at 0.8600-0.8610 as vulnerable in holiday-thinned trade.