Analysis

TradingKey - The opening act of 2026 has arrived with more intensity than Wall Street anticipated. With only a few days remaining until the Japanese House of Representatives election on February 8, incumbent Prime Minister Sanae Takaichi is making the biggest gamble of her political career.

TradingKey - Another bombshell has hit the Japanese financial market as abnormal volatility in the Japanese bond market begins to spill over into the foreign exchange market. Following a 260-pip slump last Friday, USD/JPY fell another 160 pips on Monday, hitting its lowest level since mid-November last year. A "rate check" conducted by the Federal Reserve Bank of New York on the USD/JPY exchange rate acted as the catalyst for this sharp volatility in the yen.

TradingKey - Japanese Prime Minister Sanae Takaichi issued a warning on Monday regarding recent intense market volatility, stating that speculative movements will be monitored and action will be taken if necessary. This news boosted the yen. In early Monday Asian trading, the yen extended its larges

TradingKey — The highly volatile Japanese yen has once again taken center stage in the FX market. On July 23, USD/JPY experienced a "rollercoaster" session, plunging nearly 200 pips from a high of 159.22 to 157.33 before rapidly rebounding 80 pips to 158.50. Speculation regarding potential intervention by Japanese authorities immediately dominated trading circles. While the Bank of Japan held interest rates steady that morning, Governor Kazuo Ueda subsequently issued hawkish hints. With Japanese Government Bond (JGB) yields recently surging to a 27-year high, how should the outlook for the yen be interpreted?

TradingKey - Since January 2026, global investors have once again turned their focus to the yen. The yen's exchange rate weakened further this week, falling below 159.0 against the US dollar. It has now depreciated for five consecutive months, hitting its lowest level since July 2024.

Tradingkey - The Federal Reserve lowered the target range for the federal funds rate by 25 basis points to 4.00%–4.25% late yesterday, as widely expected, and signaled two additional rate cuts this year.

TradingKey - On 17 July 2025, the Eurozone's June Harmonised Inflation data was released, aligning with market expectations. The headline HICP rose slightly from 1.9% in May to 2.0%, while core HICP remained steady at 2.3%.

Tradingkey - The minutes of the Fed meeting last night showed that there were differences among Fed officials on the outlook for interest rates, mainly due to different expectations on how tariffs will affect inflation.

TradingKey - On 1 July 2025, the Eurozone published its June inflation figures, which met market consensus: headline CPI edged up from 1.9% in May to 2.0%, while core CPI held steady at 2.3%.

Tradingkey - The European Central Bank cut interest rates by 25 basis points last week, the eighth rate cut since June last year.

Tradingkey - The US economic performance has been lackluster, with the first-quarter economy contracting at an annualized rate of 0.2%, which was worse than expected, primarily due to a surge in imports before tariffs and weak consumer spending.

LONDON, May 28 (Reuters) - If the euro supplants the dollar as the world's main reserve currency, Europe might lose some currency competitiveness - but the related capital flows it's seeking more than compensate.

TradingKey - In the short term (0-3 months), the EUR/USD exchange rate is expected to rise, primarily driven by developments on the USD side.

The EUR/JPY cross loses traction to around 159.40 during the early European session on Friday.

EUR/USD extends the prior day’s strong upside move to near 1.0670 in European trading hours on Wednesday, the highest level seen this year.

Under the combined influence of potential tariffs, growth disparities between Europe and the US and interest rate differentials, we anticipate a weakening of the euro against the dollar in the short term (0-3 months). In the medium term (3-12 months), we expect the decline of the USD Index to lead t

We strongly recommend taking a short position in the EUR/JPY pair to capitalize on this divergence.

The EUR/GBP cross gains momentum to near 0.8330 during the early European session on Friday.

EUR/USD trimmed further into the low end on Thursday, continuing to shed weight in the near-term and falling to the lowest bids since November of 2023.

The Euro (EUR) is trading softly on the session, Scotiabank’s Chief FX Strategist Shaun Osborne notes.