Dollar steady as focus turns to US payrolls, yen intervention jitters persist

The dollar index hovered at 104.20 in Asian trade Wednesday, holding inside a 103.90–104.50 range that has contained the greenback for two weeks. Traders turned their focus to Friday's US nonfarm payrolls report, the next major data point that could shift expectations for the Federal Reserve's rate path.

Economists polled by Reuters expect the US economy added 190,000 jobs in June, down from 272,000 in May. A print near that consensus would reinforce the case for the Fed to keep rates higher for longer, traders said. A weaker number would revive bets on a September rate cut, currently at about 65% according to CME's FedWatch tool.

The yen stayed under pressure. The dollar traded at 161.45 yen, not far from the 38-year low of 161.96 hit last week. Finance Minister Shunichi Suzuki said Tuesday authorities were "highly alert" to speculative moves. Traders said intervention risk kept the dollar-yen pair capped below 162. Fundamental drivers – wide interest rate differentials and Japan's persistent trade deficit – continued to favor yen weakness. The Bank of Japan's July policy meeting is the next scheduled event that could shift the dynamic, though most analysts expect no change in the central bank's ultra-loose stance.

The euro traded flat at $1.0740. Data showed eurozone inflation eased to 2.5% in June from 2.6%, in line with expectations. The European Central Bank cut rates in June and markets are pricing in one more reduction this year, likely in September. Read more on the euro

Sterling held at $1.2680 ahead of Thursday's UK general election. Polls suggest the opposition Labour Party will win by a wide margin. The pound has stayed steady through the campaign, with traders focused on the rate outlook rather than the political outcome. Check sterling positioning

Commodity currencies were mixed. The Australian dollar edged up 0.1% to $0.6660 after retail sales rose 0.6% in May, beating expectations. The New Zealand dollar was flat at $0.6090. Oil prices slipped. The Canadian dollar weakened to C$1.3640 per US dollar.

In emerging markets, the Indian rupee held at 83.45 per dollar. The Reserve Bank of India likely intervened to prevent a sharp depreciation, traders said. The Chinese yuan was little changed at 7.2680 per dollar in offshore trade, near its weakest level since November.

Friday's payrolls report is the next major catalyst. A strong print reinforces the higher-for-longer narrative, traders said. A miss, they added, would trigger a dollar selloff with the yen and gold among the biggest beneficiaries. Stay updated on forex