U.S.-Japan Coordination Pressures Dollar, DXY Falls Below 97

DXY Drops Below 97 Amid U.S.-Japan Exchange Rate Intervention Speculation

The U.S. dollar index fell below 97 on Monday for the first time since last September. Market participants speculate that the U.S. and Japan are working together to stabilize exchange rates amid prolonged yen weakness.

Investors are questioning the long-term dominance of the dollar as the world's primary reserve currency. The Federal Reserve's dovish stance has further fueled bearish sentiment toward the greenback in the short term.

Policy Coordination May Increase Downward Pressure on Dollar

Daniel Baeza, Senior Vice President at Frontclear, noted that signs of joint policy actions could intensify selling pressure on the dollar. With the Fed showing less enthusiasm for aggressive tightening, the dollar's weakening trend may persist.

He added that while such measures could help contain regional currency volatility, they might also trigger broader discussions about the global monetary policy framework.