US dollar weakens as softer CPI data cools Fed hike expectations, keeping yen near 40‑year lows

The U.S. dollar slipped on July 15 after softer‑than‑expected June consumer‑price data showed inflation at 3.5% year‑on‑year, the first decline since April 2020. The dollar fell 0.1% against the Japanese yen, which traded around ¥162.1 per dollar, near a 40‑year low. Market participants expect the Federal Reserve to skip a July rate hike, with the odds of an increase halved to about 16%, and Fed Chair Kevin Warsh’s testimony underscored the central bank’s “no tolerance” stance on persistent inflation.

Middle‑East tensions added to market unease: President Donald Trump reinstated a naval blockade of Iranian ports and the United States began a new round of strikes in the Strait of Hormuz, pushing oil prices to one‑month highs. Higher oil prices revived inflation concerns and supported the dollar’s safe‑haven appeal.

In Japan, Finance Minister Satsuki Katayama signalled that the Government Pension Investment Fund might be urged to increase domestic asset allocations, fueling hopes of yen‑supportive intervention. Analysts noted the persistent U.S.‑Japan interest‑rate differential as a key driver of the yen’s weakness and of carry‑trade activity.

Overall, the combination of softer U.S. inflation, muted Fed expectations, and escalating geopolitical risk kept the dollar‑yen pair range‑bound while the yen remained under pressure.