Forex News

Rabobank’s Senior FX Strategist Jane Foley highlights that Japanese authorities benefited from the post-FOMC US Dollar (USD) drop, which eased pressure on the Japanese Yen (JPY). The report explains how speculative long USD positions were unwound after the July 29 Fed meeting and how Japan’s Ministry of Finance intervention in USD/JPY amplified the move. It also details US Treasury cooperation via the FIMA Repo Facility to avoid forced Treasury sales.

Japanese and US authorities shape pair

"From the point of view of the Japanese authorities, the decline in the USD’s value that followed the Fed meeting last week was fortuitous, if not overdue. Until late last week the MoF had not intervened in the FX market in support of the JPY since late May and the strength of the greenback in this period may explain why."

"That said, the USD did not react well to the July 29 FOMC meeting. While surveys of economists had correctly stressed little risk of a rate hike, some market participants were betting that Fed Chair Warsh would deliver a policy tightening in order to prove his inflation fighting credibility. These positions were subsequently unwound."

"Indeed, CFTC speculators’ data highlight that in the approach to that meeting long USD positions had been built to their highest levels since September 2024, suggesting that profit-taking in the USD was almost inevitable. The move lower in the USD was accentuated by the intervention in USD/JPY by Japan’s Ministry of Finance."

"As we discussed on this page yesterday, a key question regarding what drove the US Treasury to intervene with Japan’s MoF in support of JPY is ‘what was in it for them?’ By making the Fed’s Foreign and International Monetary Authorities (FIMA) Repo Facility available, the MoF was able to temporarily exchange US treasuries for USD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• GBP/JPY edges higher as the Japanese Yen loses ground following its recent sharp rally.
• MUFG says coordinated intervention may support the Yen temporarily but cannot reverse its broader weakness without a change in fundamentals.
• The cross holds below the 100-day SMA and tests the 200-day SMA, keeping the near-term outlook bearish.

GBP/JPY rises on Tuesday as the Japanese Yen (JPY) gives back part of its recent rally, which was driven by coordinated intervention from Tokyo and Washington.

At the time of writing, the cross trades around 211.55, up 0.20% on the day.

Yen support from US intervention seen as limited and time-buying

Analysts at MUFG/BTMU argue that the recent bout of joint FX intervention offers only partial and temporary relief for the Yen. They stress that, "on balance, we expect US intervention to support the [Y]en to remain relatively small in scale," even if coordinated action with Japan helps steady the currency in the near term. In their view, "while joint intervention may prove more effective at helping to provide support for the [Y]en in the near-term, we still believe that it can only buy time." MUFG/BTMU conclude that, ultimately, "there will need to be a change in fundamentals as well to encourage a sustainable reversal of the [Y]en weakening trend that has been in place over the last five years."

Despite Tuesday’s rebound, the near-term technical picture for GBP/JPY has turned bearish. The recent sell-off pushed the cross decisively below the 100-day Simple Moving Average (SMA) for the first time since April 2025, with the pair now testing the 200-day SMA.

Technical analysis

On the daily chart, GBP/JPY trades below the 100-day Simple Moving Average (SMA) at 214.45 and hovers around the 200-day SMA at 211.75, keeping the near-term bias tilted to the downside.

The Relative Strength Index (RSI) near 30 hints at oversold conditions and the Moving Average Convergence Divergence (MACD) remains deeply negative, reinforcing selling pressure.

On the topside, initial resistance is located at the 100-day SMA at 214.45, followed by the horizontal barrier at 216.50, with a stronger cap emerging near 220.

On the downside, the 200-day SMA at 211.75 marks first support ahead of the 210 level, with deeper floors at 207 and 205, where bears could start to lose momentum if the RSI slips further into oversold territory.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• Scott Bessent says a deal with Iran to reopen the Strait of Hormuz could come as soon as Tuesday or Wednesday.
• The US Treasury Secretary expects energy prices to "settle back down" if an agreement is reached.
• WTI US Oil drops more than 3% following his remarks.

US Treasury Secretary Scott Bessent said in a CNBC interview on Tuesday that a deal with Iran to reopen the Strait of Hormuz could be reached as soon as Tuesday or Wednesday. He added that he expects energy prices to "settle back down".

Markets reacted swiftly to the comments. West Texas Intermediate (WTI) Oil fell 3.29% on the day to trade around $76.20 per barrel at the time of press, after hitting a more than three-week low of $75.68.

ING’s commodities team points out that European gas prices fell, with TTF down modestly, as the market digests storage and demand trends. They stress that while storage injections are slow and the market is tight ahead of the 2026/27 winter, absolute storage volumes and lower EU gas demand versus 2021 leave conditions more comfortable than during the earlier crisis period.

TTF eases as storage concerns grow

"European gas prices also came under pressure yesterday, although not to the same extent as oil, with TTF settling 2.65% lower on the day."

"There are growing concerns in Europe over storage levels and the slow injections we are seeing, leaving the region more vulnerable as we head into the 2026/27 winter."

"While storage is only a little above 57% full — below the utilisation seen in 2021 — in absolute volume terms it still sits just above 2021 levels."

"It’s also worth pointing out that EU gas demand is considerably lower now than it was in 2021."

"So, while the gas market is admittedly tight, it’s still quite a bit more comfortable than it was in 2021."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

TD Securities strategists expect US JOLTS job openings to fall to 7.0 million in June from 7.594 million in May, below the 7.504 million consensus forecast, as the recent increase appears difficult to sustain. They expect the data to move closer to softer private-sector hiring indicators. This would contrast with July’s stronger-than-expected ISM Manufacturing reading, which rose to 55.6 from 53.3 and reached its highest level since mid-2022.

JOLTS expected to retreat as manufacturing activity accelerates

"We expect June JOLTS job openings will decline back down to 7,000k from 7,594k in May (cons: 7,504k). The recent surge in openings is likely unsustainable. We expect JOLTS will begin moving back towards private sector indicators like Indeed, which shows a more subdued trend in hiring."

"ISM manufacturing exceeded consensus expectations, jumping to 55.6 in July from 53.3 in June (TD: 54.7, cons: 53.9), the highest level since mid-2022."

"Large increases in production, employment, and supplier deliveries were the drivers behind the topline beat. Inventories was the only component that posted a decline."

"Prices paid fell close to 2pts to 71.1 — largely undoing its post-war increase, despite oil prices moving higher on net in July."

"AI and defense industry demand were the main drivers of optimism among respondent comments. Already-strained supply chains from the Iran conflict could find it difficult to keep up. Respondents continue to voice concerns about geopolitical tensions and higher energy costs, all while dealing with changing tariff polices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)