Summary
Dollar strength peaked just before President Donald Trump's inauguration on 20 January, partly because the imposition of across-the-board tariffs was temporarily put on hold. Uncertainties surrounding the Trump administration remain unresolved, but the president's cautious stance on tariffs, reflecting his focus on curbing inflation, helped ease concerns of one-sided dollar appreciation. Meanwhile, the yen strengthened across the board during this period, driven by expectations of a BOJ rate hike and the central bank's hawkish monetary policy stance. We do not expect the yen to continue strengthening given the next rate hike is still some time away, but the situation has clearly shifted away from an environment of unilateral yen depreciation.
