The Japanese Yen (JPY) is performing poorly compared to all G10 currencies despite a general weakness in the US Dollar (USD). The USD\/JPY pair exhibits a bullish trend above the level of 158, influenced by challenging factors for the yen such as softer labour cash earnings data and changes in US-Japan spreads.<\/p>\n
Technical indicators support a bullish perspective on the USD\/JPY with recent movements, touching a key high of 158.87 seen in January 2025. Another important level was identified at 161.95 from July 2024, based on strategic market insights. Geopolitical tensions and scrutiny over the Federal Reserve’s independence influence broader market movements as analysts await US CPI data.<\/p>\n
In broader financial markets, the EUR\/USD faces resistance around 1.1700, boosted temporarily by the US Dollar’s decline. Meanwhile, GBP\/USD is supported at 1.3380 amidst renewed Greenback weakness and concerns about the Fed, setting sights on the 1.3500 level. Gold continues its rally past $4,600, fuelled by geopolitical tensions and market reactions to the Fed’s perceived independence challenges. Ethereum staking is on the rise, with Bitmine Immersion significantly increasing its staked assets. Monero hit a record high with increased activity in its derivatives market.<\/p>\n
The Yen is uniquely weak, underperforming all its peers even as the US Dollar sells off broadly. We saw last week’s labor cash earnings report miss expectations, coming in at a mere 0.8% year-over-year growth, which has led many to believe the Bank of Japan will delay raising interest rates. This divergence makes the Yen an outlier and a primary focus for our strategies.<\/p>\n
The widening interest rate gap between Japan and other major economies is reviving the Yen carry trade, where we borrow in yen to invest in higher-yielding currencies. This reminds us of the conditions that fueled the massive carry trade through much of 2024, which only began unwinding when the BoJ signaled a policy shift late last year. Now that a policy shift seems delayed again, we see a renewed opportunity to short the Yen.<\/p>\n
From a technical standpoint, we should be looking at USD\/JPY call options now that the spot price is pushing above the 158 level. We are targeting the January 2025 high of 158.87 and even the July 2024 peak near 161.95 in the coming weeks. Implied volatility on USD\/JPY options has ticked up, with the 1-month at-the-money volatility now sitting around 9.5%, suggesting the market is bracing for a significant move.<\/p>\n
The overarching theme is the “Sell America” trade, which accelerated after last week’s news of the federal investigation into the Fed. This has sent the US Dollar Index (DXY) tumbling below the 98.00 mark for the first time in over a year. The turmoil is causing massive spikes in currency volatility, with the CVIX (Currency Volatility Index) jumping over 15% in just the last few trading sessions.<\/p>\n
This flight from the dollar is fueling a historic rally in precious metals, and we should use derivatives to maintain this exposure. We see this as a clear signal to stay long in gold and silver, possibly by buying call options with strikes well above current record highs. For example, buying out-of-the-money call options on gold with a $4,800 strike for the April expiration offers a way to bet on continued panic buying.<\/p>\n
Given the Yen’s distinct weakness against the entire G10, we see better opportunities in shorting it against currencies other than the struggling dollar. We are therefore positioning long in pairs like GBP\/JPY and AUD\/JPY, using futures to build these positions. This strategy allows us to capitalize on both broad Yen weakness and strength in other currencies fueled by the anti-USD sentiment.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Yen weakens against G10 currencies; USD\/JPY bullish near 158.87 as markets eye US CPI data.<\/p>\n","protected":false},"author":62,"featured_media":17042,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-38898","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/38898","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=38898"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/38898\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17042"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=38898"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=38898"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=38898"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}