Joint US-Japan FX Intervention Caps Euro Gains; Hormuz Reopening Eyed
The New York Fed reportedly sold euros instead of dollars to fund yen purchases, limiting the common currency's upside. A potential Strait of Hormuz reopening could add further headwinds.
Last week's coordinated FX intervention by the US and Japan took an unconventional turn. According to reports, the New York Fed sold euros—not dollars—to finance its yen purchases, marking a rare operational choice.
This euro selling effectively capped recent gains in EUR/USD, as the intervention supply weighed on the pair. The move highlights the authorities' willingness to use cross-currency flows to manage yen weakness.
Analysts note that a potential reopening of the Strait of Hormuz might lend further support to the dollar, adding another factor that could keep euro upside in check.
Source: FXStreet Forex News