Thai regulators have made a sudden move. Today (January 26), the Thailand Futures Exchange announced the suspension of trading for USD/JPY futures and online silver futures. This comes as the Japanese yen exchange rate against the US dollar continues to surge significantly, and the spot silver price skyrocketed nearly 6%, once again hitting a new all-time high. Analysis suggests the sharp, sudden appreciation of the yen is primarily due to market tension sparked by signals of potential "US-Japan joint intervention." Japanese Prime Minister Sanae Takaichi previously issued a stern warning, pledging the government would take "all necessary measures" to address speculative and extremely abnormal market volatility. Separate reports indicate that last Friday, acting on instructions from the US Treasury, the New York Federal Reserve contacted major financial institutions to inquire about USD/JPY exchange rate quotes. This action is typically seen as a precursor to direct currency market intervention, and even a key signal that the US is preparing to assist Japan in supporting the yen.

In a sudden announcement, trading was halted on January 26 when the Thailand Futures Exchange declared a suspension of USD/JPY futures and online silver futures trading. Analysis points out that the primary reason for this regulatory move is the excessively violent price fluctuations in USD/JPY futures and online silver futures, which pose significant risks. During Monday's early Asian trading session, the yen surged over 1% against the US dollar, reaching a high of 153.81 yen per dollar, its strongest level in over a month. This follows a sharp gain of over 1.7% last Friday.

Influenced by these movements, the US dollar index plummeted sharply during the morning of January 26, Beijing time, falling as much as 0.58% intraday to a low of 96.9355. The index had already declined 1.88% last week, marking its largest weekly drop since June 2025. Simultaneously, boosted by increased demand due to the weaker dollar, gold and silver prices rallied strongly across the board. As of 12:30, spot gold surged 1.7% to $5,072.93 per ounce, while spot silver jumped 4.51% to $108.01 per ounce, both setting new historical records.

Other non-US currencies also continued to strengthen. On Monday, the South Korean won surged up to 1.4% against the dollar, reaching a high of 1443.25, a peak in over two weeks, and leading gains among Asian currencies. The Malaysian ringgit hit its highest level since 2018, and an index of emerging market currencies touched a record high. Analysts suggest the main driver behind this wave of dollar weakness was a warning issued by Japanese Prime Minister Sanae Takaichi on Sunday, stating the government would take "all necessary measures" against speculative and extremely abnormal market volatility.

Just prior to this statement, the USD/JPY rate had tumbled approximately 1.75% last Friday, recording its largest single-day gain in five months. Market speculation widely points to an extremely rare "rate check" by the New York Fed as the catalyst for this reversal. The New York Fed conducts financial transactions on behalf of the US Treasury, and its "rate checks" are typically a signal that authorities are concerned about trading conditions for a currency, often occurring just before direct intervention. According to The Wall Street Journal, this is a clear signal that US and Japanese authorities are preparing to intervene to halt the yen's slide.

The market has interpreted this as a sign that US and Japanese authorities are ready to jointly curb the yen's decline, triggering massive covering of short yen positions. This potential for "joint intervention" is reshaping investor risk appetite. Analysis indicates that if the Federal Reserve intervenes, it would mean the effort is no longer Japan's fight alone, potentially even evoking comparisons to a "Plaza Accord 2.0." As the Bank of Japan faces the dual pressures of maintaining bond market stability and curbing inflation, this US-backed currency defense battle could have profound effects on the US dollar, US Treasuries, and global risk assets.

It is noteworthy that such action is extremely rare. Data from the New York Fed's website shows that since 1996, the US has intervened in the currency market on only three separate occasions, the most recent being in 2011 after the Japan earthquake, when it sold yen in concert with other G7 nations to stabilize markets. How will the US dollar perform going forward? Nick Twidale, Chief Analyst at AT Global Markets, warned that given Takaichi's comments and potential US involvement, traders should be extremely cautious at Monday's open, as yen short-sellers could face a squeeze.

Brent Donnelly, founder of Spectra Markets Research & FX Advisory, pointed out that the "rate check" was intended to stabilize the situation in the illiquid market last Friday afternoon, and the Japanese Ministry of Finance is highly likely to take concrete action during Monday's New York trading session. Looking back, throughout 2025 the US dollar depreciated against all major currencies, with the dollar index accumulating a decline of over 9%. Most investment bank analysts predict that in 2026, the dollar could weaken further against the yen, euro, and pound sterling, with the dollar index expected to have about 3% more downside by the end of 2026.

Analysts generally agree that a major reason for the expected lower trajectory of the dollar index in 2026 is the anticipation that the Federal Reserve will continue to cut interest rates, while other major central banks, including the European Central Bank, will keep rates steady or even hike them. James Knightley, Chief International Economist at ING Groep NV, stated, "Among global central banks, the Fed is swimming against the tide; it remains in an easing mode. Diverging monetary policy outlooks will push the dollar lower."

Beyond monetary policy, changing attitudes of global investors towards US dollar-denominated assets will also influence the dollar index's path. Prominent US investor Peter Schiff predicts the dollar index could decline at an accelerated pace in 2026. He had warned earlier in December 2025 that the US economy is heading towards a historic crisis. He believes that inflation, along with soaring gold and silver prices, is eroding confidence in US Treasury bonds, setting the stage for a sharp decline in the dollar.