The US dollar is trading higher at the start of the North American session, retracing a portion of the declines posted during the previous session. That earlier sell-off was driven in part by suspected Japanese intervention in the foreign exchange market, which involved selling dollars and buying yen. The technical levels shaping trader bias across three major currency pairs — EUR/USD, USD/JPY, and GBP/USD — remain in focus as the session gets underway.

The primary catalyst in the forex market yesterday was the sharp decline in USD/JPY. Earlier today, the Bank of Japan left its policy rate unchanged at 1.00%, in line with broad market expectations, while reiterating its readiness to raise rates further if inflation and economic developments justify such a move. The decision itself was largely uneventful, but it arrived less than 24 hours after suspected Japanese FX intervention triggered a steep drop in USD/JPY from approximately 163.32 to a low near 158.00, coming in just above the key 200-day moving average, currently situated at 157.93.

Rather than extending yesterday's yen-positive move, the dollar rebounded following the BOJ decision. The absence of an immediate rate hike served as a reminder to markets that Japan's persistent yield disadvantage relative to the United States continues to favor the carry trade, a strategy in which traders borrow in low-yielding currencies like the yen to invest in higher-yielding ones like the dollar. As long as the rate gap between Japan and the US remains wide, that dynamic creates a structural incentive to sell yen.

The market response underscores a notable dynamic: intervention can disrupt speculative positioning and slow the pace of yen depreciation, yet it does not necessarily alter the underlying interest-rate fundamentals. Japan has periodically stepped into currency markets over the decades when rapid yen weakness threatens to raise import costs and squeeze households and businesses, but such operations have historically provided only temporary relief unless accompanied by a shift in monetary policy. Absent an acceleration of the BOJ's tightening cycle or a meaningful decline in US yields, yen rallies may prove short-lived. Yesterday's intervention likely reset speculative positioning and acted as a warning to traders, but today's price action indicates that monetary policy — not intervention — will likely determine the longer-term trajectory of USD/JPY.

On the technical front, the 100-day moving average at 160.07 remains a key barometer, though price action around that level has been volatile today. That moving average, the July 3 swing low at 160.44, and the broken 38.2% retracement of the trend move up from the May low at 160.56 have now become upside targets. The session high reached 160.84, representing the 50% midpoint of yesterday's trading range.

US Treasury yields are higher across the curve with modest flattening:

• 2-year yield: 4.264%, up 3.5 basis points
• 5-year yield: 4.403%, up 3.0 basis points
• 10-year yield: 4.685%, up 2.3 basis points
• 30-year yield: 5.221%, up 1.4 basis points

Federal Reserve speakers will draw attention today. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan are all expected to address their decisions to dissent at this week's FOMC meeting, where each favored a 25-basis-point rate hike. The unusually high number of dissenters highlights the degree of internal debate within the committee over whether the current policy stance is sufficiently restrictive given persistent inflation readings. Their remarks are expected to reinforce the view that inflation remains too elevated and that upside risks persist. These comments should also be considered within the context of Chair Kevin Warsh's new Federal Reserve. Warsh noted that markets are effectively delivering tightening on their own but did not advocate for additional policy tightening. The dissenting votes align with the historical precedent that dissent is not uncommon during transitions.

US equity markets are trading higher:

• Nasdaq up 125 points
• S&P up 1.62 points
• Dow up 173 points