EuroWire, NEW YORK: The U.S. dollar weakened broadly in late January trading as the Japanese yen climbed sharply, with investors focused on signs that officials in Tokyo and Washington were monitoring rapid currency moves. The yen’s surge helped pull the dollar lower against other major currencies, leaving the greenback near a four month low on widely followed measures of overall strength.
The yen rallied nearly 3% across two sessions and was last trading around 154.6 per dollar after sliding as far as 159.23 on January 23. In New York trading on January 26, the dollar fell to 153.30 yen, its weakest level since mid November, as traders reacted to reports of “rate checks,” inquiries to dealers about prevailing exchange rates that can accompany official monitoring.
Moves in USD/JPY spilled into the wider foreign exchange complex. The euro traded near $1.19, close to a four month peak, while sterling held near $1.37, also around four month highs. The Australian dollar hovered near $0.69 after touching a 16 month high, and the New Zealand dollar traded near $0.60 after rising in the prior session as the softer dollar supported higher yielding currencies.
Intervention Watch Intensifies
Market attention centered on official messaging and reported dealer contacts rather than any confirmed transaction in the currency market. A person familiar with the matter said the Federal Reserve Bank of New York checked dollar yen rates with dealers on January 23. Japanese officials have said they have been in close coordination with the United States on foreign exchange, comments that contributed to heightened sensitivity around the speed of yen moves.
Bank of Japan money market data released on January 26 indicated that the yen spike on January 23 was not likely driven by Japanese foreign exchange intervention. The yen eased modestly on January 27 from its strongest levels but remained well above Friday’s low, a sign that traders were cautious about pressing the currency weaker while official scrutiny remained a dominant market theme.
Dollar Under Pressure Broadly
The dollar’s slide left the dollar index near 97.1 after touching 96.808 on January 26, its lowest level in about four months. The index has fallen more than 1% so far in 2026, reflecting weaker performance against a basket of major currencies. Traders also tracked U.S. political and fiscal developments, including renewed concerns about a potential government shutdown.
The Federal Reserve began a two day policy meeting on January 27, with markets watching closely for any signals on interest rates and for developments surrounding central bank governance. The meeting comes amid a criminal investigation involving Fed Chair Jerome Powell and an effort by President Donald Trump’s administration to remove Fed Governor Lisa Cook, issues that have kept attention on institutional stability alongside traditional macro drivers.
Risk appetite in broader markets remained mixed but supportive for some assets that typically benefit from a softer dollar. On January 26, global stocks advanced, with the Dow Jones Industrial Average closing up 0.64% to 49,412.40, the S&P 500 rising 0.50% to 6,950.30, and the Nasdaq Composite adding 0.43% to 23,601.36 as investors positioned ahead of major U.S. technology earnings and the Fed decision.
Gold also climbed to record territory, with spot prices hitting $5,110.50 and last quoted around $5,053.37 an ounce on January 26. In energy, U.S. crude settled at $60.63 a barrel and Brent at $65.59. In currencies, the immediate focus remained on USD/JPY levels near the mid 150s and the dollar’s inability to reclaim ground after the yen’s rapid advance.