LONDON, September 25, 2026 (DAILYNWZ) — The dollar slipped on Friday but remained on track for a second straight weekly gain as stronger bets on higher US interest rates supported the currency, while the yen rallied after Japan reaffirmed its coordination with Washington over efforts to curb excessive weakness.
The dollar index, which tracks the US currency against a basket of major peers, fell 0.3% to 100.96, giving back some of its recent gains after reaching a two-month high on Thursday. It was still set for its first back-to-back weekly rise since June.
Markets have sharply reassessed the outlook for US interest rates since the Federal Reserve tightened policy last week. Strong economic data, renewed concerns about energy supplies and a series of hawkish comments from Fed officials have reinforced expectations for a higher-rate path.
A selloff in US government bonds has also supported the dollar, pushing long-dated Treasury yields to their highest levels in more than 20 years.
“Whilst the dollar should get a bid from higher yields, there are still ongoing, lingering concerns around the US fiscal position, the unpredictability of US policy making,” said Khoon Goh, head of Asia research at ANZ.
“I think that’s why the dollar has really struggled to continue to rally, even though yields continue to increase.”
Oil prices eased on Friday as signs emerged of improving supply disruptions and hopes grew for progress in US-Iran talks. Crude nevertheless remained near a one-week high after a Houthi missile attack on Saudi Arabia kept tensions in the Middle East elevated.
The euro rose 0.2% to $1.141 as lower energy prices reduced some expectations for further US rate increases. It was still heading for a third consecutive weekly decline after hitting a two-month low on Thursday.
Sterling gained 0.3% to $1.326 after Bank of England Governor Andrew Bailey made comments seen as hawkish by markets. The pound remained close to a three-month low and was set for a second straight weekly decline of about 1%.
### Yen Gains On Intervention Signals
The yen rose 0.8% to 157.65 per dollar after Japan’s Finance Minister Satsuki Katayama said US President Donald Trump had raised concerns about the currency’s weakness during a meeting with Prime Minister Sanae Takaichi earlier this week.
Katayama said the comments reaffirmed the US-Japan position behind their joint intervention in July and that she would remain in close contact with US Treasury Secretary Scott Bessent as policymakers stepped up warnings over renewed yen weakness.
“Katayama’s comment clearly underlines the ongoing efforts in Tokyo to portray the efforts to stem yen weakness as a continued joint strategy,” said Derek Halpenny, senior currency strategist at MUFG.
“That certainly reinforces the possibility that additional intervention could again include the US.”
Despite Friday’s rally, the yen remained on track for a second weekly decline after markets judged the Bank of Japan’s rate hike last week and its latest guidance to be insufficiently hawkish.
The offshore yuan was little changed at 6.721 per dollar as a Trump-Xi summit in Washington produced no signs of breakthroughs in closed-door discussions on AI, trade, Taiwan and the Iran war.
The Australian dollar gained 0.3% to $0.703, with markets expecting the Reserve Bank of Australia to raise its benchmark rate by 25 basis points to 4.60% next week, which would be its highest level in nearly 15 years.