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The yen surged more than 1% to a three-month high of 152.10 per dollar on Tuesday as broad dollar weakness intensified, before easing 0.4% to 152.79 on Wednesday in a modest consolidation. The move has been amplified by renewed talk of U.S.–Japan “rate checks”—often seen as a precursor to official FX intervention—after a New York Fed check last week and rising coordination rhetoric from Tokyo, keeping USD/JPY traders on high alert even as spot pulls back from the highs.

Donald Trump said the dollar was “great” when asked if it had fallen too much, and traders took the nonchalance as a green light to press short-USD positions. The dollar index (DXY) slid toward the 95.9–96.1 area after briefly plumbing a four-year low around 95.566, leaving the greenback down more than 9% in 2025 and already about 2.3% lower in January as investors weigh trade-policy volatility, geopolitical uncertainty, worries over Fed independence, and the implications of expanding U.S. fiscal deficits.

Sterling eased 0.33% to $1.3796, giving back a small part of the prior session’s surge after it jumped 1.2% and hit its highest level since 2021. The pullback looks like a typical post-breakout consolidation rather than a full reversal, with traders watching whether the move can hold above nearby support levels.

A fresh wave of dollar selling gathered pace after Donald Trump brushed off the greenback’s slide, telling reporters the dollar was “doing great,” a comment traders read as tolerance for a weaker exchange rate. The move pushed the euro above $1.20 for the first time in more than 4.5 years and drove the Swiss franc to a 10-year high; while a modest rebound is underway, investors say the Trump-era risk around USD exposure is becoming clearer. Geopolitics, policy uncertainty, hints that Washington prefers a lower dollar, and renewed worries about Federal Reserve independence helped pull the dollar index down more than 9% in 2025.

After Friday’s violent swings, dollar/yen steadied into a more controlled move on Monday, with the yen strengthening to a four-month high of 153.81 per dollar from as weak as 159.23 on Friday. The shift is being read as positioning cleanup amid mounting speculation of coordinated U.S.–Japan FX action, after sources said the New York Fed conducted rate checks—often viewed as a potential precursor to intervention—prompting traders to pare back short-yen exposure.

China’s yuan rose to a new 32-month high versus the dollar on Monday as the People’s Bank of China (PBOC) kept nudging its daily midpoint stronger to guide the pace of appreciation. The PBOC set the midpoint at 6.9843 per dollar—its strongest since May 17, 2023—but it still came 551 pips weaker than a Reuters market estimate (6.9292), the largest weak-side gap since comparable estimates began in 2022. Spot moves followed: the onshore yuan briefly reached 6.9539 and the offshore yuan 6.9522. Reuters attributed the broader bid to a softer U.S. dollar and seasonal corporate FX conversions ahead of the Lunar New Year, while Barclays warned authorities may resist further gains and introduce steps to ease upward pressure.

Footage shared online is said to show protests in Qaemshahr on the night of 18 Dey 1404, with demonstrators confronting government forces. In the video, protesters are seen running toward the security line, forcing the forces to retreat.

The yen weakened further, slipping 0.3% to 185.56 per euro—matching last week’s record low—and down 0.2% to 158.68 per dollar, near last week’s 18-month trough of 159.45. Barclays flagged that the JPY may stay vulnerable “for the time being,” citing domestic fiscal concerns and robust demand from Japanese investors for overseas assets—a mix that keeps depreciation pressure elevated even as markets watch the Bank of Japan for policy signals.

Market impact: JPY downside supports Japan exporters’ earnings translation but lifts imported inflation and intervention risk; also increases sensitivity in JGBs and USD/JPY volatility if fiscal headlines intensify.

The Indian rupee weakened further as USD/INR rose 0.3% to a record 91.38, reflecting pressure from global trade tensions and persistent capital outflows. In contrast, the South Korean won strengthened, with USD/KRW down about 0.8% to 1,468.90 on Wednesday, signaling relative resilience versus broader EM FX volatility.

Market impact: INR downside keeps India’s imported-inflation and policy-risk premium in focus, while KRW strength can support Korean risk sentiment; the gap highlights a market preference for higher-quality Asia exposures during risk-off episodes.

Iran’s parliament speaker Mohammad Bagher Ghalibaf said in a Monday address that “thousands” were killed during the 18–19 Dey protests (Jan 8–9, 2026), according to Radio Azadi/Radio Farda reporting—an unusually direct acknowledgment by a senior official of the scale of fatalities. Independent verification remains difficult amid restrictions and conflicting counts, but Reuters separately cited an Iranian official saying at least 5,000 deaths had been “verified” nationwide during the unrest.

The U.S. dollar weakened further against the offshore yuan, slipping 0.1% to 6.9540 in Hong Kong—the greenback’s weakest versus CNH since May 2023—as broader “Sell America” flows pressured the dollar. Separately, the PBoC kept benchmark lending rates unchanged for an eighth straight month, leaving the 1-year LPR at 3.00% and the 5-year LPR at 3.50%, in line with expectations.

Market impact: CNY-positive at the margin and supportive for Asia FX/risk sentiment, but sustained strength may tighten financial conditions; watch for any official “leaning” if the move accelerates.

The U.S. dollar fell for a second straight day in Asian trading on Tuesday, as White House threats toward Europe over Greenland triggered a broader “Sell America” move across U.S. equities and government bonds. The dollar index slid as much as 0.3% to 98.70, its lowest level since January 13, as investors reassessed exposure to U.S. assets amid rising policy and geopolitical uncertainty.

Market impact: Near-term USD-negative and supportive for EUR/JPY/CHF on risk-premium repricing; if the tariff dispute escalates, expect higher cross-asset volatility and pressure on U.S. duration and global risk sentiment.