BUZZ-COMMENT-Yen's haven status in question as tariff politics become fluid

The yen is losing some haven luster as the political winds shift.

Mexican President Claudia Sheinbaum managed achieved a pause in U.S. tariffs after pledging to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, particularly fentanyl. Trump is scheduled to speak with Prime Minister Trudeau later on Monday.

Market participants will also be watching for headlines later this week when Prime Minister Shigeru Ishiba visits Trump.

Before Sheinbaum’s announcement, there seemed to be little interest in chasing the yen higher. Although USD/JPY risk reversals have widened during the session, they didn’t signal a surge in demand for downside protection. Futures accounts appear more focused on buying dips in USD/JPY after the Sheinbaum remarks.

The associated improvement in risk sentiment has pushed USD/JPY back above its 153.37 to 154.54 Ichimoku cloud and Treasury yields are recovering some of their losses. Monday's ISM manufacturing report suggests inflation might be a more pressing concern than slowing U.S. growth. If non-farm payrolls on Friday -- estimated at 170K -- were to beat expectations, it might be seen as a sight that the U.S. economy remains solid.

While USD/JPY has found support, bullish momentum won't emerge unless it surpasses the Jan. 23 high of 156.76. For bears, the January double-bottom between 153.72-78 is the key support zone to watch.

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