The US Dollar index fell below the 100.00 mark following the latest FOMC meeting, where the Federal Reserve left interest rates unchanged and Chair Kevin Warsh provided less hawkish guidance than some market participants had anticipated [1][2]. According to MUFG, the lack of clear forward guidance from Warsh has increased uncertainty, contributing to heightened market volatility [1]. MUFG forecasts assume no Fed rate hikes this year and anticipate a gradual weakening of the US Dollar later in 2026, though they acknowledge that the Dollar could remain stronger if the Fed changes course [1].
The post-FOMC decline in the US Dollar was further amplified by joint intervention from the Japanese Ministry of Finance (MoF) and the US Treasury, which supported the Japanese Yen (JPY) [2][3]. Rabobank notes that speculative long USD positions, which had reached their highest levels since September 2024, were unwound after the July 29 Fed meeting, intensifying the Dollar's drop [2]. The Japanese authorities, who had not intervened in the FX market since late May, benefited from this move, and the US Treasury's cooperation via the FIMA Repo Facility allowed the MoF to temporarily exchange US Treasuries for USD, avoiding forced Treasury sales [2].
Despite the intervention, analysts at MUFG/BTMU argue that the support for the Yen is likely to be partial and temporary, suggesting that only a change in fundamentals will lead to a sustainable reversal of the Yen's weakening trend over the past five years [3]. On the technical side, GBP/JPY rebounded to around 211.55, up 0.20% on the day, but the near-term outlook remains bearish as the pair trades below the 100-day SMA (214.45) and tests the 200-day SMA (211.75) [3]. The Relative Strength Index (RSI) near 30 and a deeply negative MACD indicate continued selling pressure, with key support levels at 211.75, 210, 207, and 205 [3].
Currency performance data shows that the Japanese Yen was the strongest against the Canadian Dollar today, while it weakened against the US Dollar by 0.14% [3].
CONCLUSION
The US Dollar's decline after the FOMC meeting, combined with coordinated intervention by US and Japanese authorities, provided only temporary support for the Yen. Analysts suggest that without a shift in underlying fundamentals, the Yen's recent gains may not be sustained. Market volatility is expected to persist due to the Fed's unclear forward guidance.