The yen’s geopolitical trend has largely reversed.
The pair is at a new 34-year high, up half a cent on the day as the market bids for a peaceful resolution to the Iran-Israel skirmish. The currency signal is consistent with stocks (futures contracts +0.4% in the United States) and bonds (yields up 4 to 6 basis points across the curve), as well as with oil (down 30 cents).
USDJPY 1-day chart
For the yen, the move is particularly notable as it sinks into a technical blue sky.
All eyes are on Japan for signs of intervention, but given that the recent move has largely focused on massive purchases of US dollars following fundamentally higher CPI numbers, it’s hard to say oppose it. There have been signs of a controlled decline, but no real intervention. However, there is a limit and we could see them draw a line at 155.00.
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