The strategist said that the US Treasury may have used the euro instead of the dollar to buy yen to avoid depreciation of the national currency and to question its strong dollar policy. Two people familiar with the matter told Bloomberg that at least two major US banks received inquiries for EUR/JPY from the Federal Reserve Bank of New York last Friday. According to media reports last week, citing people familiar with the matter, the New York Federal Reserve sold euros and bought yen on behalf of the US Treasury. “The US probably doesn't want to be seen as selling off the dollar,” said David Forrester, senior strategist at Oriental Huili Bank in Singapore. “They insist on a strong dollar policy and don't want to be seen as trying to gain competitive advantage by devaluing the local currency, because this is contrary to the G20 foreign exchange agreement.” Since Japan began a new round of intervention on July 30, the euro weakened against most G10 currencies and fell by about 4% against the yen. The Bloomberg Euro Index fell 0.2% on Monday, but is still close to its highest level since June 17. J.P. Morgan strategists Junya Tanase and Patrick Locke wrote in a report to clients, “The main goal of this intervention appears to be to support Japan's request to prevent excessive depreciation of the yen, not to weaken the dollar.”

The strategist said that the US Treasury may have used the euro instead of the dollar to buy yen to avoid depreciation of the national currency and to question its strong dollar policy. Two people familiar with the matter told Bloomberg that at least two major US banks received inquiries for EUR/JPY from the Federal Reserve Bank of New York last Friday. According to media reports last week, citing people familiar with the matter, the New York Federal Reserve sold euros and bought yen on behalf of the US Treasury. “The US probably doesn't want to be seen as selling off the dollar,” said David Forrester, senior strategist at Oriental Huili Bank in Singapore. “They insist on a strong dollar policy and don't want to be seen as trying to gain a competitive advantage by devaluing the local currency, because this is contrary to the G20 foreign exchange agreement.” Since Japan began a new round of intervention on July 30, the euro weakened against most G10 currencies and fell by about 4% against the yen. The Bloomberg Euro Index fell 0.2% on Monday, but is still close to its highest level since June 17. J.P. Morgan strategists Junya Tanase and Patrick Locke wrote in a report to clients, “The main goal of this intervention appears to be to support Japan's request to prevent excessive depreciation of the yen, not to weaken the dollar.”