US Dollar Strengthens on Geopolitical Risk

The US Dollar saw renewed strength, with the Dollar Index climbing back above the 99.00 level, as traders sought safe-haven assets. Market risk appetite soured following the imposition of US sanctions on Iran, which weakened currencies such as the Australian Dollar and Mexican Peso against the greenback. This risk-averse environment was reported to be driving capital flows into haven assets, including both the US Dollar and gold.

Japanese Yen Weakness Prompts Intervention Watch

The Japanese Yen continued to trade at weak levels, with the USD/JPY pair holding firm above the 159.00 handle. The yen's ongoing depreciation against the US Dollar, Euro, and British Pound has heightened market concerns about potential currency intervention by Japanese authorities. These fears have reportedly created resistance for further gains in yen cross-pairs like the EUR/JPY.

Divergent Central Bank Policies Influence Asian Currencies

Varying monetary policy paths among Asian central banks are influencing regional currency performance. Analysts noted that the Bank of Korea is expected to hike interest rates, supporting the South Korean Won, while the Bank of Thailand is projected to hold rates, potentially weighing on the Thai Baht. Meanwhile, some analysts maintain a downside bias for the USD/CNH pair, targeting a stronger Chinese Yuan.