The Dollar

The yen will continue weakening unless the Bank of Japan raises rates at a more aggressive pace, as intervention cannot overcome wide rate differentials.

The dollar would weaken if Treasury funding shifts further toward bills, a policy response that would also amplify front-end liquidity pressures.

The dollar remains the final transmission channel for broader risk appetite, with softer inflation conditions favoring a weaker USD into late Q3 and early Q4.

Yen remains structurally weak as Japanese capital seeks superior risk-adjusted opportunities abroad, making official intervention only a temporary reprieve rather than a durable solution.

Dollar devaluation is ultimately required to reduce the debt burden, with a weaker currency providing only temporary relief from destabilizing higher Treasury yields.

The dollar has an unfavorable short-to-medium-term outlook in the reflation regime as capital flows toward risk assets, commodities, gold, and Bitcoin.

The yen’s post-intervention appreciation is unlikely to prove durable, as unchanged monetary conditions and Japan’s underlying political and economic realities continue to favor weakness.