USD/CNY

Tuesday: Dollar Reaches a One-Week High

Tuesday’s 21.07.2026 Asian currency trading was marked by caution. Most regional currencies remained confined to narrow trading ranges, unwilling to make a decisive move in either direction. Investors faced a difficult choice: on the one hand, the escalating conflict in the Middle East was pushing the dollar higher as a safe-haven currency; on the other, hopes for a diplomatic resolution prevented it from strengthening too sharply.

The U.S. Dollar Index rose to 100.99, its highest level since July 15. This appreciation was not driven by strong U.S. economic data or hawkish signals from the Federal Reserve. It was purely a geopolitical risk premium. In a world where military action is expanding with each passing day, the dollar remains one of the most reliable assets.

However, the dollar’s strength is putting pressure on Asian currencies. Energy-importing countries are particularly vulnerable: the rise in oil prices observed over the past several days is worsening their trade balances and creating additional inflationary pressure. For countries forced to purchase expensive oil on global markets, this represents a serious challenge. Their central banks now face a dilemma: raise interest rates to combat inflation and the risk of currency depreciation, or maintain accommodative policies to support economic growth.

Middle East Conflict: Ninth Consecutive Night of Strikes

The escalating conflict between the United States and Iran remains at the center of attention. U.S. Central Command confirmed the completion of a ninth consecutive night of airstrikes against Iranian targets. The strikes targeted command centers, missile and drone launch sites, and maritime infrastructure.

However, the most alarming development occurred on another front. The Iran-backed Houthi movement in Yemen announced a naval blockade of Saudi Arabia. This means that energy supplies passing through the Red Sea and the Bab el-Mandeb Strait could be disrupted....

Monday on the Currency Markets: The Calm Before the Storm

The first trading day of the week on Asian currency markets was marked by cautious anticipation. Most regional currencies remained within narrow trading ranges, as though listening closely to events unfolding thousands of kilometres away. Investors faced a difficult choice: on the one hand, the US dollar is receiving safe-haven support amid the escalating conflict in the Middle East; on the other hand, declining US Treasury yields and expectations that the Federal Reserve will keep its policy unchanged are putting pressure on the currency.

The US Dollar Index stabilised at 100.73 after briefly strengthening at the beginning of the session. However, this calm may be deceptive, as a busy week lies ahead, featuring central bank meetings and the release of key economic data across Asia. Markets are preparing for possible surprises.

The Dollar and the Middle East: A Game on Two Fronts

Geopolitics continues to be the primary driver of currency markets. The conflict between the United States and Iran has entered its ninth consecutive night of air strikes. Brent crude oil prices have risen sharply, automatically intensifying concerns about global inflation. Should energy supplies be disrupted, fuel prices could soar, affecting consumers and manufacturers worldwide.

For the US dollar, this situation is a double-edged sword. On the one hand, rising oil prices support the dollar because the United States is a major energy exporter, and higher oil prices improve the country’s trade balance. On the other hand, elevated oil prices could force the Federal Reserve to reconsider its monetary policy if inflation begins to accelerate.

For now, however, markets are pricing in the continuation of the Fed’s current policy at its meeting on 29 July. Federal funds futures indicate an 85.6% probability that interest rates will remain unchanged. This...

Introduction: The Calm Before the Storm or the Quiet After It?

Thursday’s trading session in Asian currency markets was surprisingly subdued. Most regional currencies remained confined to narrow trading ranges, as though bracing themselves for an inevitable shock. The weakening of the US dollar, which would normally provide support to Asian assets, was completely offset by increasingly troubling geopolitical developments. Investors who were ready to embrace risk only yesterday have now adopted a wait-and-see approach—and they have compelling reasons to do so.

The Middle East is once again at the center of global attention, and this time the situation appears far more serious than another escalation in rhetoric. For the fifth consecutive day, the US military has carried out strikes against Iranian targets. The Pentagon has not commented on the details of the operations, but regional sources indicate that the attacks are specifically targeting Iran’s military infrastructure.

Tehran, meanwhile, has responded with increasingly forceful statements, and the Strait of Hormuz has become the central subject of every discussion. Iranian officials have once again emphasized that control over this strategic route is not merely a matter of economic advantage but a cornerstone of national security. For financial markets, this sounds like a warning: disruptions to energy supplies are no longer a purely hypothetical threat but an increasingly realistic scenario.

Against this backdrop, the US dollar is struggling to find firm ground. The weakness of the American currency no longer appears to be a temporary correction. Inflation data released the previous day came in below expectations, and markets are now almost unanimous in expecting the Federal Reserve to leave interest rates unchanged at its next meeting.

The US Dollar Index has stabilized near 100.5, hovering close to its monthly lows. However, rather than celebrating the weaker dollar, Asian investors are choosing to...

Introduction: Monday Begins with a Sell-Off

The new trading week began with an all-too-familiar scenario for Asian currencies: the dollar strengthened, regional currencies weakened, and investors sought refuge in U.S. assets. Rising U.S. Treasury yields and geopolitical tensions surrounding Iran created a perfect storm for emerging-market currencies and even some developed-market currencies.

However, amid this sea of red, one exception has captured the attention of market participants. The Japanese yen, which until recently was considered the weakest performer among G10 currencies, is unexpectedly showing signs of life. Renewed speculation about possible asset repatriation by the world’s largest pension fund is giving the yen hope of some relief.

What is driving the markets this Monday morning? What factors are prompting investors to flee Asian assets, and why has the yen suddenly become the center of attention? Let us unravel this complex combination of geopolitics, monetary policy, and hopes for a Japanese miracle.

The Dollar on Top: Why the U.S. Currency Continues to Rise

Inflation Fears and Interest Rate Expectations

The dollar’s strengthening on Monday is not a coincidence but the logical result of developments over the past few days. Investors are seriously concerned that inflation may remain elevated for much longer than previously expected. Geopolitical factors are only intensifying these concerns.

The upcoming testimony of Federal Reserve Chair Kevin Warsh before Congress and the U.S. inflation data scheduled for release on Tuesday have become the main events setting the tone for trading. Markets are looking for any indication of how long the Fed intends to keep interest rates elevated.

The rise in U.S. Treasury yields is a direct result of these expectations. When investors believe that interest rates will remain high, they demand higher yields on bonds. This, in turn, makes dollar-denominated assets more attractive and strengthens the currency.

Geopolitics as...

Wednesday in Asian currency markets began with an oppressive calm. Asian currencies did not move. The dollar did not move. The dollar index (DXY) remained frozen after four days of decline. Everyone stood still. Like rabbits before a predator. Or like traders ahead of the most important event of the week — the meeting of the U.S. Federal Reserve, the first under new Chairman Kevin Warsh.

USD/JPY — the Japanese yen — fell by 0.1% to 160.30. It was a symbolic move. Even after the Bank of Japan raised its rate to 1.0% the previous day — the highest in 31 years — the yen did not strengthen. Because everyone is waiting for the Fed.

USD/CNY — the Chinese yuan — was unchanged. USD/SGD — the Singapore dollar — was unchanged. USD/INR — the Indian rupee — fell by 0.3%, but this was a local move. AUD/USD — the Australian dollar — was unchanged after the RBA kept rates steady.

Only USD/KRW — the South Korean won — rose by 0.4%, breaking away from the general trend. But even this was likely linked to a tech rally in Samsung and SK Hynix shares rather than currency policy.

The reason for the calm is anticipation. Traders do not want to open new positions ahead of the Fed meeting. Uncertainty is too high. The risks are too large.

There is also the peace agreement between the U.S. and Iran. Details are becoming clearer. On Tuesday, the first concrete terms emerged. The agreement provides for the immediate resumption of Iranian oil exports. Iran agrees not to develop nuclear weapons and freezes its nuclear program for 60 days for negotiations.

This is positive for markets. But traders want to see a signed document, not just words. So they wait.

So what is happening in...

On Wednesday, June 16, 2026, an event is taking place in the foreign exchange market that most ordinary people will not even notice. But those who trade currencies know: today, large FX options are expiring. Billions of dollars, euros, yen, pesos, yuan, and reais may be exercised, not exercised, or rolled over. And depending on what happens, exchange rates could shift by tenths of a percent—or more.

This is not just a technical detail. It is a key market moment. Because options are both insurance and speculation at the same time. When they expire, the market loses support or resistance levels. Prices can move sharply. Traders holding positions may be forced to close them.

And today, on Wednesday, large options expire across several currency pairs. Let’s start with USD/JPY. The largest option is worth $1.09 billion with a strike at 158.00. Almost a billion dollars! What does this mean? The trader who bought this option has the right to buy or sell dollars at 158 yen per dollar. If the market is above 158, the option is in the money. If below, it is worthless.

In addition, options expire for $749.6 million at 157.25 and $691.1 million at 158.50. There are also USD/CNY options worth $1.8 billion at a strike of 6.7928. USD/BRL options worth $767.5 million at 5.1100. EUR/USD options worth nearly 1 billion euros at 1.1450. AUD/USD options worth 933.3 million AUD at 0.6650. USD/MXN options worth $629.5 million at 17.24.

All of these expire today. And they may affect markets.

But that’s only today. On June 18 (tomorrow), even larger options expire: EUR/USD options worth 8.73 billion euros at 1.1500! Yes, nearly 9 billion euros. No joke. And USD/JPY options worth $1.79 billion at 155.00. And USD/CAD options worth $884 million at 1.3735.

These are truly large...

Tuesday: A Day of Historic Decisions and No Market Reaction

Tuesday began with an event that, under normal circumstances, would have shaken currency markets to their core. The Bank of Japan raised its short-term policy rate by 25 basis points to 1.0% — the highest level in 31 years. The last time Japanese interest rates stood at this level was in 1995, when the internet was still in its infancy and many of today's traders had not even been born.

The decision passed by a 7–1 vote. Governor Kazuo Ueda did not attend the meeting as he is currently undergoing medical treatment in the hospital. The meeting was chaired by Deputy Governor Shinichi Uchida instead. It is an unusual situation: the head of the central bank was absent during a historic policy decision.

And what happened?

Virtually nothing.

USD/JPY barely moved. The yen remained around ¥160.23 per dollar, only slightly different from levels seen before the announcement. Traders who expected a rate hike to strengthen the yen were left disappointed.

Why?

Because markets had already priced in the move over recent weeks. The real surprise would have been if the Bank of Japan had not raised rates. Since the hike was widely expected, the market reaction was essentially zero.

The yen continues to trade near the psychologically important ¥160-per-dollar level. Back in April, when the dollar first broke above ¥160, Japanese authorities intervened in the currency market. This time, they have remained on the sidelines, apparently viewing ¥160 as an acceptable exchange rate with policy rates at 1.0%.

But let's take a closer look at what is actually happening across Asian currency markets on Tuesday, why most currencies appear frozen in place, and what traders are waiting for from other central banks.

Bank of Japan: A Historic Move Without the...

Wednesday on the currency markets was defined by anticipation. The dollar stood still, like a predator before the leap, making no sharp moves either upward or downward. The U.S. dollar index and its futures were virtually unchanged during Asian trading, stabilizing after a brief surge earlier in the week.

But this stillness is deceptive. Beneath it lies enormous tension — traders are frozen ahead of two events capable of turning the market upside down. One is geopolitical, the other macroeconomic. And both sit at a point of maximum uncertainty.

Iran Talks: Diplomacy Through a Crosshair

The main factor preventing the dollar from falling — and at the same time keeping it from rallying — is Iran.

Negotiations between the United States and Iran over de-escalating the conflict are continuing, but no one seems to fully understand their real condition. According to media reports, indirect contacts are still ongoing even after U.S. forces struck targets in southern Iran.

It is a strange, almost surreal picture: bombs are falling while diplomats continue talking. War and peace exist simultaneously, in parallel realities.

As recently as the weekend, U.S. officials sounded optimistic. Trump spoke of a memorandum that was “largely agreed upon.” Markets celebrated, oil prices fell, and the dollar weakened.

But this week Washington’s tone has become more restrained. The strikes on Iranian facilities were presented as defensive, yet the very fact they occurred suggests the negotiating process is stalling. The sides remain stuck on key issues — the fate of Iran’s enriched uranium, the timeline for reopening the Strait of Hormuz, and security guarantees.

Until those issues are resolved, the dollar will continue to receive support as a safe-haven asset.

The mechanics here are simple and ruthless. As long as there is a risk of escalation, there is a risk of disruptions...