Dollar-Yen hits 40-year high as ECB holds rates steady

The US dollar reached a new 40-year high against the Japanese yen in intraday trading, while also gaining ground against the euro.

The move followed the European Central Bank’s decision to maintain its monetary policy stance unchanged, reinforcing the greenback’s momentum amid shifting global risk sentiment.

The dollar’s strength against the yen marks a significant milestone, reflecting persistent divergence in monetary policy expectations between the Federal Reserve and the Bank of Japan.

Meanwhile, the euro softened as traders digested the ECB’s decision to hold rates steady, despite earlier signals that inflation pressures might warrant a more hawkish tilt.

This development extends the dollar’s recent rally, which has seen the US dollar index climb to its highest level in 13 months.

The surge is driven by a wave of buying interest as investors adjust their expectations for Federal Reserve policy, with many now pricing in a higher-for-longer interest rate environment rather than imminent cuts.