The dollar-yen pair traded in a narrow range in European foreign exchange markets on the 27th, standing at 159.41 yen as of 22:00, roughly 7 sen weaker for the dollar compared with 159.48 yen at 20:00. With the Kansas City Fed’s annual Jackson Hole Symposium set to begin today, the pair remained in a tight range around the mid-159 level.
Chicago Fed President Austan Goolsbee said the same day that “the biggest near-term concern is that inflation is not under control,” noting that tariff- and war-related price increases pose challenges for the Federal Reserve.
EUR/USD also traded sideways, standing at $1.1641 as of 22:00, roughly 0.0001 dollar firmer for the euro compared with $1.1640 at 20:00. Amid a lack of fresh catalysts, the pair remained in a narrow range around the mid-$1.16 level.
The European Central Bank (ECB) released minutes from its July 22-23 Governing Council meeting, which stated that “the possibility of future rate hikes cannot be ruled out.” Market participants broadly interpreted this as leaving room for a resumption of tightening depending on inflation developments.
EUR/JPY stood at 185.57 yen as of 22:00, roughly 6 sen weaker for the euro compared with 185.63 yen at 20:00. This pair also lacked clear direction, remaining in a narrow range around the mid-185 level.
Reference ranges for the day so far are as follows.
| Currency Pair | Reference Range |
|---|---|
| Dollar-yen | 159.12 – 159.53 yen |
| EUR/USD | $1.1637 – $1.1659 |
| EUR/JPY | 185.47 – 185.77 yen |
Note: Ranges as of 22:00.
The previous day’s U.S. core PCE price index showed accelerating month-over-month growth, indicating rising inflationary pressure, which initially drove dollar buying as long-term rates rose on expectations of continued tight monetary policy. However, the market shifted to a wait-and-see stance ahead of Fed Chair Warsh’s speech, pausing the rise in rates and the dollar.
In Asian trading today, the yen weakened following remarks from a Bank of Japan deputy governor, with the dollar holding above the 159-yen level. Among market participants, some expect the environment of higher U.S. rates and a stronger dollar to persist given sticky U.S. inflation indicators, while others note that concerns over currency intervention above the 160-yen level are making the upside heavy.
Warsh is scheduled to speak at the Jackson Hole Symposium on the 28th, and with speculation that he may hint at early rate hikes amid accelerating inflation, the dollar could remain difficult to sell. Additionally, while U.S.-Iran peace talks are expected to resume, the lack of concrete progress and any firming in crude oil prices would likely curb dollar selling. Expectations also persist for a fiscal consolidation program that the U.S. Treasury is expected to announce soon.
In the market, major currency pairs continue to lack clear direction ahead of key speeches at the Jackson Hole Symposium and economic indicators such as U.S. initial jobless claims due tonight.
