- Yen extends last week's rally
- Barclays sees longer-term downward pressure on yen persisting
- Euro/dollar steadies as markets await U.S. data
Aug 3 (Reuters) - The yen rose for a third straight session against the euro and the dollar on Monday, keeping traders on alert for further intervention after Tokyo and Washington stepped into the foreign exchange market last week to support Japan's currency.
Meanwhile, oil prices sank after U.S. President Donald Trump held back from a fresh attack on Iran, but the greenback held steady before key U.S. jobs data. Iran said it is not currently holding talks with the United States.
Japan and the United States conducted coordinated yen-buying intervention and will not hesitate to take further action, Japan's finance ministry said on Monday.
TRADERS ON ALERT FOR INTERVENTION
The yen also advanced against other currencies like the euro and sterling, stirring speculation Japanese authorities could be in the market again.
“Dollar/yen 1.5-2 standard deviations above the long-term trend have been a useful guide for identifying when intervention risk enters the danger zone,” said Stephen Spratt, APAC developed markets rates strategist at Societe Generale.
“Currently this (level) is 162.72-164.96 area,” he added.
The Japanese currency rose 1% in the Asian morning to a high of 155.20 per dollar, its strongest level in about three months, before paring some gains. It was last up 0.39% at 156.76.
The 200-day moving average close to 158 is likely to act as resistance, according to Rabobank senior forex strategist Jane Foley.
The yen rose 0.40% to 180.70 versus the euro , after hitting 179.435, the highest since mid-November 2025.
Bank of Japan data showed Tokyo may have bought as much as $58.97 billion worth of yen on Thursday. The yen has been under pressure for years, undermined by the BOJ's gradual approach to monetary policy tightening, which has kept yield differentials wide between Japan and the rest of the world.
Barclays analysts argued that even if the yen were to strengthen further in the near term, longer-term downward pressures remain in place.
A Goldman Sachs strategist said that outside of a change in either the policy mix or global growth outlook, encouraging repatriation would be the most powerful policy for influencing the currency over a long period of time.
Market participants worried that Japan's expansionary fiscal policy could weigh on the currency.
EURO/DOLLAR ROUGHLY UNCHANGED DESPITE DROP IN OIL PRICES
The dollar index was little changed at 99.82, having slid more than 1.5% last week. The euro was up 0.01% at $1.1523, after hitting a fresh 1-1/2-month high at $1.1559 in Asian trade.
An easing of geopolitical tensions typically weighs on the dollar while supporting the euro and yen, as safe-haven demand fades and concerns over energy-exposed economies recede.
"The fact that the dollar is not broadly weaker probably owes to the unresolved issue of whether the Federal Reserve will hike in September," said Chris Turner, global head of forex at ING.
"It seems the only way the Fed can avoid hiking in September is if the U.S. data is poor enough," he added, recalling that a major input to that decision comes this week in the form of jobs data.
Analysts also said the U.S. Treasury's reported decision to intervene through the euro, wants to avoid signalling a desire for broad-based dollar weakness.
The Federal Reserve Bank of New York sold euros for yen on behalf of the Treasury through two banks, the FT said.
"The European Central Bank has been quiet so far on the matter, but if it were to intervene as well, this would look like an implicit currency accord to strengthen the yen," Paul Mackel, global head of forex research at HSBC, said.
Reporting by Stefano Rebaudo; Editing by Jamie Freed and David Holmes
Source: Reuters