• Yen rises sharply before unwinding, intervention remains on radar of markets

• USD/JPY dropped from 157.25 to 155.69, on Monday and has since made recovery moves

• USD/JPY could climb further after last week's 'action', note the 155.50 golden ratio underpins

• 155.50 Fibo is a 61.8% retrace of the 152.28 to 160.72 (February to April) EBS rise

• Japan's Golden Week holiday, could cause wild swings in the yen owing to thin liquidity

• 30-day log correlation between USD/JPY and EUR/JPY is back above +0.5 (pairs are moving in tandem)

Daily Chart


Correlation Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

May 4 (Reuters) - FX traders could take USD/JPY higher after last week's slump caused by likely direct intervention as key technical levels continue to limit the downside.

On Friday USD/JPY dropped from 160.72 to 155.49 to hit its lowest level since February, testing the 155.50 Fibonacci level, before recovering. The 155.50 level is a 61.8% retrace of the 152.28 to 160.72 (February to April) EBS rise and it is seen as key support. The 61.8% retracement is known by some as the "golden ratio" in the sequence due to its outsized significance in determining the direction of the price action.

While direct intervention is a strong political tool to influence the market, it usually does not change the long-term dynamics of a currency pair's direction.

While USD/JPY has traded below the Ichimoku cloud, which currently spans the 156.29-158.11 region, only a daily close below this region would prevent a potential bear-trap. A potential bear-trap is usually a bullish signal and could see the market rebound after last week's likely intervention. USD/JPY dropped once again on Monday, fuelling speculation of renewed Japanese buying to stem the yen's long-running slide. As Japanese markets are closed on Monday through Wednesday for the Golden Week holiday, that could cause wild swings in the yen owing to thin liquidity.
Daily Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• USD/JPY dropped 157.25 to 155.69 Monday - another bout of suspected intervention after last week's fall from 160.00

• Markets are on alert for more, with FX options the clearest gauge of intervention fear

• 1-month 25-delta risk reversals reached 2.0 in favour of JPY calls over puts - a new high since January

• That's up sharply from 0.55 early Thursday, just before Japan's first intervention from above 160.00

• This JPY call over put skew signals the options market sees far greater risk of a sharp USD/JPY drop than a rally

• Risk reversals are a volatility play - when spot falls and implied vol rises together, JPY call holders profit on both

• USD/JPY option risk reversals - turning intervention fear into profit
JPY=EBS


USD/JPY 25 delta risk reversal


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY dropped 157.25 to 155.69 Monday - another bout of suspected intervention after last week's fall from 160.00

• Markets are on alert for more, with FX options the clearest gauge of intervention fear

• 1-month 25-delta risk reversals reached 2.0 in favour of JPY calls over puts - a new high since January

• That's up sharply from 0.55 early Thursday, just before Japan's first intervention from above 160.00

• This JPY call over put skew signals the options market sees far greater risk of a sharp USD/JPY drop than a rally

• Risk reversals are a volatility play - when spot falls and implied vol rises together, JPY call holders profit on both

• USD/JPY option risk reversals - turning intervention fear into profit
JPY=EBS


USD/JPY 25 delta risk reversal


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• EUR/USD consolidates 1.1721-60 Monday after Friday's peak at 1.1785

• Plenty of option strike expiries within range - related hedging flows can help contain

• Close above cloud top 1.1746 could help bulls but looks unlikely right now

• Initial support at Friday's 1.1715 low and 100-DMA at 1.1710

• Daily cloud twist on May 25 near 1.1670 worth watching as these often attract price action

• UK and Japan on holiday today, limiting liquidity and overall action

• Markets are looking ahead to US NFP Friday as the key macro catalyst for direction

• One eye on Strait of Hormuz stalemate for updates, though oil remains off last week's highs
EUR=EBS


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• AUD/USD +0.1% Mon in subdued trading ahead of RBA meeting outcome Tue

• RBA monetary policy meeting in progress, 25 bps OCR hike anticipated

• Trump's plan to help ships caught by Strait of Hormuz meets scepticism

• Iran says U.S. has responded to latest proposal, consensus remains unlikely

• U.S. Mar factory orders due Mon, Reuters poll consensus +0.5% m/m

• Range Asia 0.7188-0.7228, support 0.6834 0.6660, resistance 0.7250 0.7283
AUD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Shares of Nexus Minerals rise as much as 16% to A$0.058, their highest level since March 19

• Stock posts its biggest intraday pct gain since April 8

• The gold miner signs a memorandum of understanding (MoU) with Australia's Macro Metals unit, Macro Gold Mining Services (MGMS)

• Under the MoU, Macro Gold to provide and fund mine development, mining operation to complete delivery of Crusader-Templar gold deposit

• Near 2 million shares change hands, 2.6x the 30-day average volume

• NXM stock has fallen 20% YTD, including day's moves

(Reporting by Roshan Thomas in Bengaluru)

• USD/SGD stays bid, last 1.2733, but still lower vs Fri close 1.2739

• Could keep clear from Bollinger downtrend channel at 1.2715

• Tracking closely USD/JPY, which is firming up to 157.07 from 156.60

• Following Japan's yen intervention, cautious yen-selling has resumed

• But risk-on in Asia stocks helps to keep a lid on most USD/AXJ

• STI +0.7% while Hang Seng +1.9%; Japan, China markets closed Mon
SGD


(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• AUD/USD flat Mon, with material moves unlikely ahead of RBA outcome Tue

• RBA monetary policy meeting currently underway, 25 bps OCR hike expected

• AU Mar building approvals -10.5% m/m (Reuters poll consensus -10.0%)

• Trump flagging help for ships trapped by Strait of Hormuz closure

• Iran says U.S. has responded to latest pre-peace talks proposal

• U.S. Mar factory orders due Mon, Reuters poll consensus +0.5% m/m

• Range Asia 0.7188-0.7228, support 0.6834 0.6660, resistance 0.7250 0.7283
AUD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY down 0.15% in Asia on optimism about progress in U.S.-Iran talks

• Iran says reviewing U.S. response to its 14-point proposal

• Trump says U.S. operation will aid ships stranded in Strait of Hormuz

• Traders wary of further intervention by Tokyo in thin market to support yen

• Japan’s Mon–Wed Golden Week holiday will amplify impact of any such measure

• Fading prospects of Fed rate cuts, elevated oil prices limit downside

• Support 156.40-50, 155.80-85, 155.50, resistance 157.30-40, 158.00

• Friday range 155.49-157.3250, Asia range 156.66-156.95
Japan has recently had some success with currency interventions:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• AUD/USD +0.3% early Mon; DXY softens after Trump flags Hormuz assistance

• Says U.S. will begin helping ships stranded in Strait of Hormuz from Mon

• Iran says U.S. has responded to latest proposal, division remains likely

• RBA monetary policy meeting underway Mon, 25 bps OCR hike expected Tue

• AUD pushing upper hourly Bollinger band, topside momentum capped short term

• AU Mar building approvals due Mon, Reuters poll consensus -10.0%

• Range Asia 0.7188-0.7228, support 0.6834 0.6660, resistance 0.7250 0.7283
AUD Hourly Bollinger Study & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• NY opened near 0.7190 after 0.7184 traded overnight, pair rallied in early NY action

• Risk rallied on report Iran sent another proposal to the US via Pakistan

• Gold, silver, stocks rallied while oil, USD, US yields & USD/CNH traded downward

• AUD/USD rallied to a 4-year high of 0.7228, selling took hold however

• Pres. Trump said he wasn't satisfied with Iran's latest proposal; risk soured a bit

• USD, yields, oil & USD/CNH firmed up while stocks & precious metals gave up some gains

• AUD/USD neared 0.7205 late in the session, the pair traded up only +0.04% late

• Rising daily, monthly RSIs & pair's hold above the 10-DMA are bullish signals
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• GBP$ soft in NorAm afternoon trade, -0.07% at 1.3586; NY range 1.3658-1.3591

• Pair had moved higher on hawkish BoE outlook, and fresh Iran peace proposal

• NorAm high put in at 1.3658 shortlived after Pres Trump downplayed peace progress

• UK yield advantage not enough to sate bulls amid geopolitical, UK political uncertainties

• GBP$ res 1.3658 Friday high, 1.3678 upper 30-d Bolli, 1.3712 daily flash high Feb 11

• Supt 1.3588 Friday low, 1.3544 daily cloud top (fmr res), 1.3472 well-bruised 100-DMA

GBP$ Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

(Adds "bulls" to headline)

• NY opened near 1.1745 after 1.1719 traded overnight, rally extended in early NY

• Report that Iran sent its latest proposal to the US via Pakistan rallied risk

• USD, US yields , oil , USD/CNH all traded downward

• Gold , stocks silver rallied on upbeat risk sentiment

• EUR/USD hit an 8-session high of 1.1785, sellers then emerged as risk softened

• Pres. Trump said he is imposing tariffs on EU vehicles & isn't satisfied with Iran's proposal

• USD, yields & oil firmed up; EUR/USD neared 1.1730, was near flat late in the session

• Daily gravestone doji formed & daily RSI diverged on the high, are worries for EUR/USD bulls
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Credit Agricole CIB Research discusses the scope of Japan's MoF intervention on Thursday.

"The JPY surged yesterday following the first official FX intervention since 2024 as reported by the Nikkei news agency. The trigger was the push by USD/JPY above 160 that has already led to very strong verbal interventions from Minister of Finance Satsuki Katayama and Vice Minister of Finance for International Affairs Atsushi Mimura. Katayama said the MoF is nearing the time to take bold action in FX. Mimura went further and said it was his final warning before taking action," CACIB notes.

"The MoF could remain on high alert and may exploit the lower liquidity during the Golden Week holiday period and more favourable market positing to intervene again to support the JPY. Pushing the JPY in the opposite direction next week could be the rollout of US labour market and ISM data as well as Japan’s own labour earnings data. Keeping the BoJ hawkish is growing signs higher inflation and a tight labour market are leading to stronger real wages growth. If this were to continue, it would keep Japan’s rates market favouring a BoJ rate hike in June," CACIB adds.

• Cable holds above 1.3600 after positive start to May

• 1.3600 is a former resistance level turned support point

• Offers pre-1.36 capped GBP/USD gains in mid-April

• 1.3642 was 10-week peak as dollar softened on news from Iran

• Iran sends proposal for negotiations with U.S. to mediator Pakistan

• Next week's key UK event risk is local elections on May 7

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

MUFG discusses the scope of Japan's JPY intervention on Thursday.

"Yesterday we had the most explicit and strongest warning from the Vice Finance Minister for International Affairs, Atsushi Mimura, who gave a “final warning” over yen selling and the sudden and sharp drop in USD/JPY that followed was certainly indicative of intervention by the BoJ on behalf of the MoF. The five-big figure drop in USD/JPY is far too big a move on just rhetoric and the report from the Nikkei that intervention took place points strongly to intervention," MUFG notes.

"What this intervention does is provide some time for the BoJ to assess the uncertainties related to the conflict in the Middle East. There was an understandable reluctance to hike this week due to the lack of clarity and that reluctance coupled with the Fed being more hawkish opened up scope for a de-stabilising yen sell-off, possibly next week when Japan will be on vacation for Golden Week – Monday through Wednesday next week is a Japan holiday.

But with yen shorts not as extensive as in past intervention episodes there is a danger that this action does not have a lasting impact. An escalation in the conflict and/or a further rise in energy prices could see USD/JPY rebound quickly," MUFG adds.

• EUR/GBP treads water, pair still digesting yesterday's drop into the low 0.86s

• Pullback was likely more month-end flow related than a fundamental repricing

• Range lows 0.8600-15 still untested and holds significance

• Clean break below opens the 200-week MA at 0.8595

• May 7 local elections are a near-term GBP overhang

• That said, a weak Labour showing feels largely in the price

• Seasonal flows through May remain a GBP headwind though

• False break of 0.8590-0.8600 would likely be a dip-buyer trigger
EURGBP weekly chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

Bank of America Global Research discusses the scope of Japan's JPY intervention on Thursday.

JPY intervention was likely sizeable…

"In line with our expectations, the BoJ struggled to deliver a "hawkish hold" which, alongside higher oil prices, pushed USDJPY above 160. On Thursday, an escalation of currency rhetoric by Japan officials, including FM Katayama, preceded a collapse in spot. The fact that USDJPY's sell off exceeded that of prior large USD selling interventions in '22 and '24 all but confirms reports of FX intervention," BofA notes.

… but '26 ≠ '24

"While the '24 interventions proved effective in hindsight (USDJPY fell ~13% between July and September), we expect the latest move to be less durable  Spillover to broader risk sentiment has been limited too, compared to '24, partly because yen-funded carry trades have been less prevalent, according to our metrics.

Fading JPY strength is akin to catching a falling knife, but prudent in our view, especially since historical interventions have tended to be one-off (no more than a couple of days) rather than persistent," BofA adds.

ANZ Research previews next week's May RBA policy meeting.

"Focus next week will be on the RBA meeting, where we expect a 25bp hike, taking the cash rate to a terminal 4.35%. OIS markets have assigned around a 75% probability of a hike. Beyond the decision itself, the voting split will be closely watched, particularly if the decision is close (such as a 5:4 or 6:3 split). The post-meeting press conference will also be watched for whether it was a hawkish hike, potentially signalling more hikes ahead, or if it was a more cautious ‘wait and see’ hike. This distinction will have implications for market pricing of RBA rate hikes and thus the AUD," ANZ notes.

"With markets already pricing close to three hikes in total (including 25bp for next week with a year-end implied rate of around 4.8%), we see scope for a reduction, particularly in the event of a cautious hike. In such a scenario, we see mild downside risks in the AUD/USD, with initial support at around 0.7150. Given market pricing, we think it will be difficult for the RBA to ‘out hawk’ the market, so we see limited upside from a hawkish hike," ANZ adds.

• AUD/USD hit a 10-session high of 0.7205 overnight; USD, US yield drops buoyed

• Sellers emerged however, 0.7184 hit in Europe, NY opened near 0.7190, pair was down -0.16%

• USD/CNH, oil gains & drops in gold , silver

weighed on AUD/USD

• A daily doji formed & daily RSI diverged on the high, could be concerns for AUD/USD bulls

• Consolidation of gains off April 13 low, rising monthly RSI give bulls some comfort however

• US April S&P Global and ISM manufacturing PMIs are data risks in NY's morning
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

By Justin McQueen

May 1 (Reuters) - After months of verbal jawboning, Japan finally delivered on its intervention threats after USD/JPY was sold aggressively from 160 to 155.50.

What is notable is the tactical shift under Finance Minister Satsuki Katayama. The old playbook under Masato Kanda, Japan's former top currency diplomat, was widely read as velocity-driven – a 10-yen move in a month, or 4% in two weeks.

This episode breaks that mold. USD/JPY had been grinding 158-159 for weeks and the moment it popped above 160, USD/JPY was hit. The takeaway here suggests levels are the trigger now, not speed. 160 is likely to be the ceiling until further notice.

So where does USD/JPY go from here? Judging by prior intervention episodes, USD/JPY has room to fall much further. Recall in July 2024 when we saw an initial drop from 162 to 158, before tagging 150 in short order and ultimately falling to 140. Sure, the Bank of Japan was hiking, and U.S. non-farm payrolls were falling fast, so there were amplifiers.

But the setup here implies that near-term risk-reward leans against fading the move lower. Today’s price action also suggests that another round of activity from the Ministry of Finance may have occurred. Thus, if it is willing to defend 160 on the way up, this emphasises that 160 is the line in the sand.
USDJPY 10 minute chart


USDJPY intervention episodes


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

May 1 (Reuters) - Japanese authorities need USD/JPY to close below a key Fibonacci level on Friday as that would help extend weakness into next week. The yen suddenly jumped against the dollar on Friday, a day after Tokyo authorities were widely believed to have intervened to prop up the Japanese currency. Japan's top currency diplomat Atsushi Mimura on Friday said speculation remained rife, a blunt warning that Tokyo is ready to step back into markets after intervening just hours earlier to prop up the embattled yen.

The volatile USD/JPY dropped from 160.72 to 155.49 in Friday's session on the EBS platform, to test the 155.50 Fibonacci level: a 61.8% retrace of the 152.28 to 160.72 (February to April) rise. 155.49 was the lowest level since February 25. A daily close below the 155.50 Fibo on Friday would be a bearish sign for USD/JPY.

The 61.8% retracement is known by some as the "golden ratio" in the sequence due to its outsized significance in determining the direction of the price action.

While direct intervention is a strong political tool to correct market forces, it usually does not change the long-term dynamics of a currency pair's direction.

Complicating the picture further: Japanese markets will be closed on Monday through Wednesday for the Golden Week holiday, which could cause wild swings in the yen due to thin liquidity, analysts say.
Daily Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Cable jumped to 1.3621 high as USD/JPY slid to 155.49 EBS low at 0655 GMT

• 1.3621 is fresh ten-and-a-half week peak (1.3612 was Thursday high)

• GBP/USD was sub-1.35 before Japan intervened to strengthen the yen on Thursday

• 1.3500 was low after BoE kept its policy rate at 3.75% on Thursday, by 8-1 vote

• Markets currently see BoE's June rate decision as coin toss between hike/hold

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)