JPY weakens against USD in early NA trade – Scotiabank

💡 DMK Insight

The JPY’s 0.2% slip against the USD signals deeper issues for traders: rising US yields are putting pressure on the currency. With the Fed’s firm stance on rates, the JPY’s weakness could continue, especially as traders anticipate further divergence in monetary policy. This underperformance against the G10 suggests that the JPY might not just be reacting to domestic factors but also to broader global trends. If US yields keep climbing, look for the JPY to test key support levels, which could trigger stop-loss orders and exacerbate the decline. Keep an eye on the 110.00 level as a psychological barrier; a break below could lead to further selling pressure. On the flip side, if there’s any unexpected dovishness from the Fed, we might see a short-term bounce in the JPY. But for now, the trend is clearly bearish, and traders should be cautious about long positions in JPY pairs until we see a shift in yield dynamics.