Insights 
VT 
The Japanese Yen (JPY) is experiencing significant selling pressure, while Gold has surged to a record high above $3,900. The European economic calendar includes Sentix Investor Confidence data for September and Retail Sales figures for August. Central bank policymakers’ comments will be monitored later.
Japanese Yen’s performance last week showed it was weakest against the Australian Dollar. In the USD/JPY market, the pair opened with a bullish gap due to the leadership win of fiscal dove Sanae Takaichi in Japan’s ruling party. Takaichi’s stance is against further monetary tightening by the Bank of Japan (BoJ), with potential tolerance for another 25 basis-point interest rate hike by next January.
US Dollar and Gold Movement
The US government remains shut without signs of resolution. Despite this, the US Dollar Index rebounds, hovering above 98.00 during the European session. Gold sees strong demand at the week’s start, trading above $3,900 amid growing uncertainties in the US economic outlook.
EUR/USD trades lower near 1.1700 as ECB President Christine Lagarde prepares to address the European Parliament. Meanwhile, GBP/USD struggles around 1.3450, with the Bank of England Governor Andrew Bailey attending the Global Investment Summit 2025 in Scotland.
The election of Sanae Takaichi signals a likely return to a more dovish Bank of Japan, putting serious pressure on the Yen. We’ve seen USD/JPY break the critical 150 level, a psychological barrier not sustained since the policy interventions of late 2022. Considering Japan’s latest core inflation report for August 2025 still hovered at 1.9%, Takaichi has a strong case to resist further monetary tightening, making short-yen positions attractive.
Despite the ongoing US government shutdown, the Dollar is showing resilience, but we should remain cautious. We remember the 35-day shutdown back in the winter of 2018-2019, which eventually weighed on growth, and this deadlock could be similar. With the latest weekly jobless claims already ticking up to 215,000, derivative traders should consider hedging any aggressive long-dollar positions against a sudden resolution or worsening economic data.
Gold as a Safe Haven
Gold breaking $3,900 is a direct response to the uncertainty in the US and is now the market’s primary safe haven. This rally is supported by strong fundamental demand, with recent data for the third quarter of 2025 showing central banks were still net buyers of over 240 tonnes. Traders should view any pullback as a potential buying opportunity, as the underlying trend appears very strong.
Given these dynamics, the most straightforward derivative plays involve betting against the Yen through call options on currency pairs like USD/JPY or EUR/JPY. This strategy provides exposure to further Yen weakness while strictly defining the maximum potential loss. Another compelling trade is to look at Gold priced in Yen (XAU/JPY), which could benefit from both the flight to safety and the weakness of Japanese monetary policy.
