Forex News
- GBP/JPY steadies near 211.00 as geopolitical tensions weigh on sentiment.
- RSI below 50 signals bearish momentum remains firmly in control.
- Break below 210.34 exposes 210.00 and 209.63 support levels.
The GBP/JPY consolidates at around 211.00 as risk appetite turned sour due to increasing tensions in the Middle East after US President Donald Trump revealed that the US forces' mission would extend between two and three weeks.
GBP/JPY Price Forecast: Technical Outlook
The GBP/JPY technical picture remains downwardly biased after exiting a bearish flag, though a failure to clear the 100-day Simple Moving Average (SMA) at 210.16 exacerbated a recovery towards 211.00. Momentum as measured by the Relative Strength Index (RSI) shows that sellers are in charge, as the index remains below its neutral level.
For a bullish continuation, a clear break of the 50-day SMA opens the door to challenge the 20-day SMA at 211.98. Once surpassed, the next stop will be 212.00, followed by the next cycle high seen at 213.31, the March 26 peak. On further strength, the next resistance is the yearly high at 215.00.
On the other hand, a drop below the April 2 daily low of 210.34 will expose the 210.00 figure, followed by the March 31 swing high at 209.63. Below here, the next area of interest will be the 207.23, the February 17 cycle low.
GBP/JPY Price Chart - Daily
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.33% | 0.24% | -0.40% | 0.25% | -0.66% | 0.56% | 0.28% | |
| EUR | 0.33% | 0.57% | -0.13% | 0.59% | -0.33% | 0.90% | 0.62% | |
| GBP | -0.24% | -0.57% | -0.63% | 0.01% | -0.90% | 0.33% | -0.01% | |
| JPY | 0.40% | 0.13% | 0.63% | 0.68% | -0.22% | 0.99% | 0.60% | |
| CAD | -0.25% | -0.59% | -0.01% | -0.68% | -0.94% | 0.31% | -0.03% | |
| AUD | 0.66% | 0.33% | 0.90% | 0.22% | 0.94% | 1.24% | 0.90% | |
| NZD | -0.56% | -0.90% | -0.33% | -0.99% | -0.31% | -1.24% | -0.34% | |
| CHF | -0.28% | -0.62% | 0.01% | -0.60% | 0.03% | -0.90% | 0.34% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
US President Donald Trump touted the destruction of a bridge in Tehran, Iran. He warned that there was “much more to follow” and urged Tehran to “make a deal before it is too late."
Iran’s foreign minister Abbas Araghchi said Washington’s recent strikes on civilian infrastructure will not force the country to back down, adding that such actions “convey the defeat and moral collapse of an enemy in disarray.”
Iranian state media reported that the death toll from Thursday’s attack on the B1 bridge in Iran has risen to eight, up from two, and 95 others were injured.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
US President Donald Trump signed an executive order that could slap up to 100% on certain imported medicines from companies that don't reach deals with his administration in the coming months, Bloomberg reported on Thursday.
A White House statement said that the new levy applies to patented drugs made in countries that lack tariff deals with the US by companies that don’t have most-favored-nation-pricing agreements with the administration. Duties for products made by certain larger companies will take effect in 120 days, while items from smaller manufacturers won't be subject to tariffs for another 180 days.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
- Gold price falls to around $4,675 in Friday’s early Asian session.
- Higher oil prices raised inflation concerns and changed US interest rate expectations.
- The US March jobs data will take center stage later on Friday.
Gold price (XAU/USD) remains on the defensive near $4,675 during the early Asian session on Friday. The precious metal falls as US President Donald Trump's comments about the war with Iran spiked oil prices. Trading activity remains muted due to Good Friday.
Trump said during a primetime televised speech from the White House on Thursday that his core "objectives are nearing completion" in Iran. Nonetheless, he added that the US would hit Iran “extremely hard” for the next two to three weeks.
These remarks have pushed crude oil prices higher and reduced expectations of interest rate cuts. Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
Traders will take more cues from the key US March jobs data, which is due on Friday. Markets expect the Nonfarm Payrolls (NFP) to show 60,000 in March, while Unemployment Rate is expected to hold steady at 4.4% during the same period. If the reports show a weaker-than-expected outcome, this could undermine the US Dollar (USD) and provide some support to the USD-denominated commodity price.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
UOB’s Global Economics & Markets Research, led by Enrico Tanuwidjaja and Vincentius Ming Shen, notes that Indonesia’s trade surplus widened slightly in February 2026 to USD1.27bn, extending 70 months of gains. The report highlights strong value-added exports and rising capital goods imports, but stresses that the overall trade surplus is likely to narrow as geopolitical tensions and supply chain risks weigh on Indonesia’s external position.
Surplus resilience faces narrowing prospects
"Going forward, trade surplus may narrow despite more downstreaming efforts and shifts towards higher-value exports amid risks from global supply chain disruptions and geopolitical tensions."
"The downstreaming strategy has delivered tangible results, particularly in nickel, and should be extended to other commodities such as iron & steel, coal, and refined fuels."
"The Balikpapan refinery provides an additional strategic revenue stream for exports in the aftermath of the current Middle East tension."
"Regional and global trade partnerships, including ASEAN cooperation and reciprocal tariff arrangements, will be critical to sustaining momentum."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
ING’s Min Joo Kang notes that South Korea’s March consumer price inflation rose modestly, with government fuel caps and food vouchers limiting the impact of higher Oil costs. Core inflation eased slightly, but ING expects recent energy and currency moves to push prices higher in coming months. The Bank of Korea is projected to stay cautious as it monitors external shocks.
Oil and currency seen lifting prices
"South Korea’s consumer price inflation rose 2.2% year-on-year in March (vs 2.0% in February, 2.3% market consensus). On a monthly basis, prices rose 0.3%, below the market consensus of 0.6%. Rising global oil prices explained most of the increase, though the impact was smaller than expected."
"Government measures such as the fuel price cap and food vouchers helped to reduce the impact on consumers. Transportation prices rose the most, by 5% YoY, compared to the previous month’s 1.1%. But food prices declined to 0.5% from the previous month’s 2.1%."
"The March figures indicate that the uptick in commodity prices has not yet broadened to other products or services. Excluding food and energy, core inflation edged down to 2.2% (vs 2.3% in February, 2.1% market consensus)."
"Although today’s inflation increase came in below expectations, we expect the recent rise in energy prices to exert a stronger influence in the months ahead. Fuel costs continued to rise despite the price cap. We also expect currency impacts to feed through to domestic prices in the coming months."
"Price pressures remain relatively contained due to government support, even as domestic demand is poised to weaken. Thus, the Bank of Korea is expected to keep its policy rate at 2.5% at the April meeting. The BoK will likely take a wait-and-see approach as it evaluates whether external shocks are contained or intensify."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- NZD/USD trades near 0.5700 with downside pressure amid strong USD demand.
- Donald Trump's Iran stance boosts safe-haven flows.
- Hormuz Strait headlines offer brief relief but fail to shift overall bearish bias.
The NZD/USD pair is trading around the 0.5710 region, maintaining a bearish tone amid heightened geopolitical tensions and risk aversion, as the US Dollar (USD) strengthens.
The Greenback remains well supported after Donald Trump signaled a more aggressive stance toward Iran, warning that additional weeks of conflict are likely. Reports also suggest that Iran is not currently interested in negotiations, keeping markets on edge. However, sentiment briefly improved during the American session after headlines indicated that Iran is drafting a protocol with Oman to manage traffic through the Strait of Hormuz, easing fears of prolonged supply disruptions.
Despite this temporary relief, safe-haven demand continues to underpin the USD, weighing on risk-sensitive currencies like the New Zealand Dollar (NZD).
On the domestic front, New Zealand has no major data releases today, leaving the NZD exposed to external drivers. Earlier indicators, including softer growth momentum and cautious sentiment, continue to limit the Kiwi's upside potential.
Short-term technical analysis:
In the 4-hour chart, NZD/USD trades at 0.5716. The near-term bias is mildly bearish, as price holds below the descending 20-period Simple Moving Average (SMA) near 0.5731 and the 100-period SMA around 0.5806, keeping the pair capped by a layered moving average barrier overhead. Recent candles show repeated failures to sustain above the short-term average, while the Relative Strength Index (RSI) at 42 stays below the 50 midline, reinforcing persistent downside pressure rather than a momentum recovery.
Immediate support is located at 0.5715, where a horizontal level underpins the current consolidation area, followed by 0.5705 if selling extends. On the upside, initial resistance emerges at 0.5726, with a tighter cap at 0.5730 aligning near the 20-period SMA, and a break above this band would open the way toward the distant resistance cluster starting at 0.5907. As long as the pair trades below 0.5730, rallies are vulnerable to renewed supply within this broadly negative 4-hour setup.
(The technical analysis of this story was written with the help of an AI tool.)
- GBP/USD dropped 0.65% on Thursday to close near 1.3220; the pair has now fallen more than 650 pips from January's high near 1.3870, and the 2026 low around 1.3080 is the next obvious level of interest.
- BoE Governor Andrew Bailey pushed back on rate hike pricing on Tuesday, saying markets are "getting ahead of themselves," but traders are still betting on at least two hikes this year.
- Friday's US NFP report drops at 12:30 GMT while equity markets are closed for Good Friday, creating a thin-liquidity setup that could amplify moves in either direction.
Thursday's session was a downer for the British Pound. GBP/USD opened near 1.3300, sold off steadily through the day, and closed around 1.3220, losing 0.65%. The 50-day exponential moving average (EMA) near 1.3400 and the 200-day EMA around 1.3360 both remain a tricky technical hurdle, and the pair continues to close well below both. The Stochastic RSI sits at 73, which is elevated but not yet overbought, meaning there is room for the selloff to extend before momentum indicators start flashing warning signs. Looking lower, there is not much standing between current levels and the 2026 low near 1.3080 set in mid-March.
How the Pound went from rate cuts to rate hikes in six weeks
It is worth stepping back and appreciating how dramatically the outlook for the Bank of England (BoE) has shifted since the Iran war began. In February, markets were pricing in at least two rate cuts for 2026, with a move as early as March looking like a near certainty. The BoE had already cut rates by 150 basis points since August 2024, bringing the Bank Rate to 3.75%, and UK inflation had been falling toward the 2% target. Then the Strait of Hormuz closed, Oil surged above $100, and everything changed. By mid-March, swap markets had flipped entirely, pricing in as many as four rate hikes. That number has since come down to around two, but the mere fact that the market went from expecting easing to pricing tightening in the span of weeks tells you how much damage the energy shock has done to the UK's inflation outlook. The BoE's own staff now projects Consumer Price Index (CPI) inflation reaching 3.5% by the third quarter of 2026, up from a pre-war forecast of around 2%.
Bailey says hold, but the data might not let him
BoE Governor Andrew Bailey tried to calm things down on Tuesday, telling Reuters that markets are "getting ahead of themselves" on rate hike expectations. His message was clear: the BoE held in March by unanimous vote, and the April 30 meeting will be another assessment, not a foregone conclusion. But Bailey is walking a tightrope. JP Morgan economist Allan Monks has argued that the conditions for an April hike could be met if energy prices stay elevated and firms begin passing costs through to consumers. Deutsche Bank's Sanjay Raja has gone further, saying that risks of "early and multiple hikes no longer look misplaced." The UK is particularly vulnerable here. The country imports roughly 40% of its Oil and up to 60% of its natural gas, making it one of the most energy-exposed economies in the G7. The Ofgem price cap shields households until July, but after that, the full force of higher wholesale energy costs will hit consumer bills. BoE policymaker Megan Greene noted in the March minutes that "the risk of inflation persistence has risen, perhaps significantly" in light of the supply shock.
The technical damage is hard to ignore
From a chart perspective, Thursday's breakdown is the kind of session that changes the tone of a trend. GBP/USD had been consolidating between 1.3200 and 1.3450 for most of March, with the 200-day EMA acting as a rough floor. That floor is gone now. The pair closed more than 100 pips below the 200-day EMA, and both moving averages are likely to begin curling lower if price stays at these levels. The 2026 range is well defined, with the January high at 1.3870 as the ceiling and the March low near 1.3080 as the floor. A retest of that floor from current levels would represent barely another 140 pips of downside. Below 1.3080, the next area of interest does not emerge until the 1.2950-1.3000 zone, which dates back to late 2025 price action. On the upside, the broken 200-day EMA close to 1.3350 becomes the first level that bulls would need to reclaim to stabilize the picture, and that is now more than 100 pips overhead.
Friday's NFP and the long weekend gap risk
The immediate catalyst is Friday's Nonfarm Payrolls (NFP) report out of the US, due at 12:30 GMT. The consensus is for roughly +57K jobs, a rebound from February's -92K, and Thursday's strong jobless claims print of 202K suggests the risks may be skewed to the upside. US equity markets are closed for Good Friday, which means liquidity across all Dollar pairs, including GBP/USD, will be thinner than usual. A strong NFP number would likely push the Dollar higher and drag GBP/USD closer to the March lows. A miss could offer a brief reprieve, but with the BoE stuck between an inflation shock and a stalling economy, Sterling does not have a clean bullish catalyst of its own to lean on. The broader picture remains one where the Pound is caught between a Federal Reserve (Fed) that cannot cut and a BoE that cannot decide whether to hike. Until one of those central banks blinks, or the Oil shock resolves, the path of least resistance for GBP/USD continues to point lower. The question heading into the long weekend is not whether the pair retests 1.3080, but whether it holds when it gets there.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- USD/JPY climbed to near 159.60 on Thursday as the US Dollar strengthened on surging Oil prices and fading Fed rate cut expectations, putting the pair within striking distance of the critical 160.00 level.
- Japan's MOF has repeatedly warned of "decisive action" against disorderly Yen moves, and 160 is the exact level that triggered nearly $62 billion in intervention spending back in 2024.
- Friday's NFP report drops at 12:30 GMT while US equity markets sit closed for Good Friday, creating a dangerous setup where the US Dollar could move sharply on a thin liquidity backdrop.
- The BoJ's April 27-28 meeting looms as the next major policy inflection point, with markets pricing roughly a 71% chance of a rate hike.
USD/JPY is heading into Friday's Asia session trading just below 159.60, and the setup going into the long Easter weekend is about as uncomfortable as it gets for Yen traders on either side. The pair has rallied roughly a full figure from Wednesday's lows near 158.50, driven entirely by the US Dollar reasserting itself after President Trump's Wednesday night address killed the de-escalation narrative that had briefly pulled Oil below $100 per barrel. West Texas Intermediate (WTI) Crude Oil surged around 8% on Thursday to near $110, Treasury yields firmed, and Federal Reserve (Fed) rate cut expectations faded further. All of that is Yen-negative. But the closer USD/JPY gets to 160, the louder Tokyo's warnings get, and the more dangerous it becomes to be long.
The 160.00 line: Why this number matters more than most
This is not just a round number. In April-May 2024, when USD/JPY last pushed through 160, Japan's Ministry of Finance (MOF) deployed a record $62 billion in intervention over roughly a month, causing violent multi-hundred pip reversals with no warning. In January 2026, the pair briefly breached 159, and speculation immediately surfaced that Tokyo had conducted a stealth intervention, a suspicion bolstered by reports that the New York Fed had conducted a "rate check" on behalf of the US Treasury. The MOF has never formally confirmed the January episode, but the market got the message. Since then, Vice Finance Minister for International Affairs Atsushi Mimura and Finance Minister Satsuki Katayama have both explicitly stated that authorities are prepared to take "decisive action" against excessive Yen depreciation. That language is the standard pre-intervention playbook. The problem for Tokyo right now is that the Yen's weakness is not being driven by speculative carry trades the way it was in 2024. This time it is Oil. Japan imports roughly 90% of its crude from the Middle East, and with WTI above $110 and the Strait of Hormuz effectively closed, the country faces an energy import bill that structurally weakens the Yen regardless of what the MOF does. That makes intervention a bandage, not a fix. But it does not mean Tokyo will not use it.
NFP drops into a closed market
Friday's March Nonfarm Payrolls (NFP) report lands at 12:30 GMT, and here is the problem: US equity markets are closed for Good Friday. The New York Stock Exchange, Nasdaq, and bond markets are all dark. CME Globex futures will trade, but liquidity will be a fraction of a normal session. The consensus expectation is for roughly +57K jobs, a rebound from February's brutal -92K print, which was the worst single-month loss in recent memory. Thursday's weekly jobless claims reading of 202K, well below the 212K consensus, suggests the labor market may be stronger than the February number implied. ADP's March print of +62K, released Wednesday, also pointed to a modest recovery. But here is what matters for USD/JPY: a strong NFP print would push Fed rate cut expectations even further out, widening the US-Japan yield gap and putting more upward pressure on the pair heading into Monday's reopening. A weak print could give the Yen a temporary lifeline, but with Oil still elevated, any relief would likely be short-lived.
The BoJ is stuck, and the market knows it
The Bank of Japan (BoJ) held rates at 0.75% at its last meeting, and the April 27-28 meeting is shaping up as the most consequential in months. Markets currently price a roughly 71% probability of a hike, and new board member Toichiro Asada signaled a "cautious, data-driven" approach at his first briefing this week. The fundamental case for hiking is strong: Japanese wage growth is running above 4% annually, core-core inflation (excluding food and energy) sits at 2.5%, and Yen weakness is amplifying imported inflation through higher fuel and freight costs. But the BoJ is trapped. Hiking into an energy shock risks tipping an already fragile recovery, while standing pat allows the Yen to weaken further, compounding the very inflation problem rates are supposed to address. Wellington Management noted in a recent report that the January intervention episode, particularly the suspected US Treasury involvement, actually makes an April hike more likely, not less. Their view is that intervention buys time but does not fix the underlying cause, which is the still-wide US-Japan rate differential sitting at roughly 275 basis points.
Heading into Asia with no good options
For USD/JPY traders heading into Friday's Asia session, the risk matrix is unusually lopsided. Longs face the intervention cliff at 160, a level where history says the MOF has been willing to spend tens of billions of dollars to defend. Shorts face the structural headwinds of a rising Oil price, a firmer US Dollar, and a BoJ that is still months behind the curve on normalization. NFP adds another layer of uncertainty on a day when liquidity will be thin and US equity futures will be the only real-time gauge of Dollar sentiment. The path of least resistance still looks modestly higher for USD/JPY, but "modestly" is doing a lot of heavy lifting in that sentence. If the pair pushes above 160 in thin Friday trade, the MOF will face a choice: intervene into a holiday-thinned market and risk being overwhelmed by fundamental flows, or wait until Monday and risk the pair running even further. Neither option is good. And that is the story of USD/JPY right now: a pair where every participant, from the BoJ to the MOF to the speculative community, has a reason to act and a reason to wait.
USD/JPY daily chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Commerzbank’s Volkmar Baur highlights that China’s economy started 2026 slightly better than expected, driven by a sharp rise in exports and a swelling current account surplus. State-linked banks are recycling these surpluses into foreign assets, while higher commodity prices are expected to end deflation as producer prices and the GDP deflator turn positive over coming quarters.
Exports, current account surplus and deflation outlook
"The Chinese economy got off to a slightly better start to the new year than expected, once again buoyed by a sharp rise in exports."
"The already very high current account surplus is therefore likely to rise further this quarter."
"Data from the financial sector show that it is primarily Chinese banks that are recycling the surpluses and investing them in foreign assets."
"This suggests once again that the banking sector is actively intervening in the exchange rate to weaken the CNY by purchasing assets denominated in foreign currencies."
"However, trends in commodity prices strongly suggest that producer prices are likely to turn positive year-over-year as early as March. The GDP deflator should therefore follow suit by the second quarter at the latest."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
