Yen bears are finding support from global inflation dynamics, and they may expect Japanese policymakers may be more tolerant of currency weakness as a result.

USD/JPY’s break to two fresh year-to-date highs following central bank meetings this week signals renewed upside potential after a long stretch of consolidation, during which implied volatility and the average true range fell to the lowest level since 2022. The pair is underpinned by rising short-term Treasury yields after unexpectedly hawkish comments about inflation from Fed Chair Kevin Warsh, alongside similar concerns voiced by the Bank of England, even as oil slides to a three-month low and shares advance. DXY pushing to a one-year high above its upper Bollinger on short-covering adds to the bullish bias.

Despite the move, Japanese officials have offered only limited verbal resistance. Chief Cabinet Secretary Minoru Kihara said authorities can act “at any time,” while noting a weaker yen supports corporate profits but raises costs for firms and households. While MOF officials may comment on FX before the weekend, the subdued tone from Kihara suggests intervention may not be imminent, even as yen shorts stretch, with dollar strength driven by Fed policy divergence.

Option convexity points to a choppy but still upward-biased move, with scope to test the 2024 high of 161.96 even as yen shorts employee options to hedge. The key concern for officials may be the psychological normalization of the 160 level, which could open the door to a deeper move toward the November 1986 high near 165 as it retraces a multi-decade decline. A close below 160 would help change this developing mindset.
Yen OI


Yen Monthly


Yen


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

MUFG Research reviews today's June BoE meeting.

"Macro view: The BoE left rates unchanged at 3.75%, as expected, with a 7-2 vote split and no change to the core guidance. The tone of the statement and messaging reinforced a clear ‘wait and see’ stance. Since the last meeting, softer UK data and the retracement in energy pricing after the US-Iran deal have reduced the urgency for action. The majority of officials are still comfortable that tighter financial conditions will sufficiently counter energy-driven inflation risks. It now seems that the hawks have lost the argument for a proactive, ECB-style hike and we ultimately believe that second-round risks will remain contained given the extent of UK labour market slack. We are therefore dropping our call for tightening this year with the BoE set for a prolonged hold before resuming gradual easing in 2027," MUFG notes.

"Markets view: UK yields and the GBP have continued to correct lower after today’s MPC meeting. The recent US-Iran deal and softer UK economic data have helped to ease pressure on the BoE to raise rates in response to the energy price shock. The BoE indicated today that they were not in a hurry to tighten policy and wanted time to assess the fallout for the UK economy. We have dropped our own forecast for two BoE hikes this year. It leaves room for the UK yields and the GBP to continuing moving lower as BoE rate hike expectations are scaled back especially against the USD after the Fed opened the door for hikes overnight. UK political uncertainty could add to downside risks for the GBP and gilts after today’s Makerfield by-election," MUFG adds.

Bank of America Global Research summarizes the key notes from its latest meetings with US investors.

"US investors appear almost uniformly bearish on Europe. They see limited progress on structural reforms, are underwhelmed by the impact of Germany's fiscal stimulus so far, and view Europe as highly exposed to energy disruptions and competition from China. They see scope for the Fed to be repriced higher, but view ECB hikes as either "risk management" or a potential "policy mistake". In FX, bearishness on EUR is similar to what we observed in February 2025, although positioning appears to lag," BofA notes.

"We also expect relative data to continue weighing on EURUSD over the summer and see scope for further Fed repricing. Over the medium term, however, we maintain a bullish EURUSD bias. A viable Iran peace deal would reduce uncertainty and lower energy prices. This summer could mark the peak of US-Euro area growth divergence, in line with our economists' base case. We also see a low bar for positive surprises around European reforms and German fiscal policy. That said, we share concerns around next year's European elections," BofA adds. 

(Repeats with no changes)

June 18 (Reuters) -

• FX options expire at 10-am New York/1400 GMT on Thursday 18 June

• EUR/USD: 1.1400-05 (1.1BLN), 1.1415-25 (775M), 1.1450 (2.74BLN)

• 1.1465-70 (518M), 1.1475-80 (792M), 1.1490-95 (483M), 1.1500-10 (14.7BLN)

• 1.1515-20 (575M), 1.1525-35 (1.2BLN), 1.1540-50 (3.73BLN)

• 1.1555-65 (805M), 1.1570-80 (2.3BLN), 1.1585-95 (1.2BLN), 1.1600-10 (3.3BLN)

• 1.1615-25 (2.3BLN), 1.1630-40 (6.04BLN), 1.1645-55 (5.4BLN)

• 1.1660-75 (1.92BLN), 1.1700 (1.7BLN)(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• GBP unable to find support despite firmer-than-expected jobs data

• Policy-relevant metric softer; private sector wages at 2.9% vs BoE Q2 3% f/c

• Undershoot reinforces downside risks to GBP via softer domestic inflation impulse

• Macro driver remains external as the hawkish Fed meeting dictates near-term price action

• Event risk ahead with the BoE decision and Makerfield by-election in focus

• EUR/GBP retains topside bias after holding key support at 0.8600-20

• Resistance seens at 0.8681 (May 29 high) and 0.8700 (200DMA)
eurgbp daily chart


private sector wage growth


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

(Repeat with addition of Thursday's EUR/USD expiries)

June 18 (Reuters) - Foreign exchange option expiries for the New York cut at 10.00 a.m New York (1500 GMT) can, under certain conditions have an impact on currency spot prices.

For Thursday's EUR/USD expiries there is a massive 1.1500 strike worth over EUR 14 billion. This deal is likely to impact the spot price.

Gamma hedging is a major driver when traders who are short of options often hedge their exposure in spot. As spot moves closer to key strikes near the expiry time, hedging flows can increase and become one-sided (buying if market is below a big strike, selling if above), which can influence spot.

Market conditions that can heavily influence the impact of option expiries include the following. The notional size of the expiry if large relative to typical market liquidity in that pair and the time of day. Strikes that are near the current spot (at or very near-the-money into the cut), especially if there are several clustered strikes. If dealer positioning is skewed (the street is generally short gamma), so many players need to hedge in the same direction and if liquidity is thinner (e.g., around data, holidays, or in less-liquid currency crosses), so hedging flows have a greater impact.

Spot traders will look for patterns that can appear ahead of option expiries.

Magnet effect: If there's a large expiry, at or very near spot, the price sometimes gravitates toward that strike into the cut as hedgers adjust.

Volatility spike / mean reversion: Short-gamma hedgers may buy high and sell low as spot moves, which can add noise and short-term volatility. Long-gamma players can have the opposite, dampening effect.

Fade after the cut: Once the options expire and hedging flows stop, the market can "relax", and any artificial pressure around a strike may fade.

Option expiries, if strikes are large can impact spot but not always, and usually only when certain conditions are met.

EUR/USD option expiries for Thursday, June 18
EUR/USD Option expiries for June 18


(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• Yen could be on the brink, despite the BOJ's rate hike and official concerns about a weak yen

• USD/JPY briefly surged to 160.79 on Wednesday, a nearly two-year high

• That rise has wiped out USD/JPY losses caused by Japan's April 30 intervention

• Japan vows to act 'any time' on yen as markets brace for intervention

• Spot has traded in a tight 160.54–160.76 EBS range, the key level to watch is 161.00

• A break above 161.00 would intensify pressure on Japanese officials to act

• A continued lack of action from authorities could encourage further yen selling across markets

• 30-day log correlation between USD/JPY, EUR/JPY well below +0.5 (relationship broken)

Daily Chart


Correlation Chart


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

• AUD/USD meets headwind pre-0.70425 (Tuesday low) after rising from 0.6995

• 0.6995 was Wednesday low, after USD jumped on Fed's hawkish hold

• Wednesday high was 0.70755, pre-Fed (0.7079 was Tuesday high)

• 0.6995 is the lowest level since last week's two-month low of 0.6979 (June 11)

• U.S. and Iran presidents sign ceasefire agreement

• Citigroup pushes back Fed rate-cut timeline amid rising hawkishness

AUDUSD


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

• Cable slid to 1.3264 as dollar jumped on Fed's hawkish hold Wednesday

• 1.33845 was pre-Fed low. 1.3325 (June 11 low) is now a resistance level

• U.S. and Iran presidents sign ceasefire agreement

• UK jobless rate 4.9% vs 5.0% forecast; wages up 3.4% vs 3.2% forecast

• BoE is set to keep its policy rate at 3.75% at 1100 GMT; 7-2 MPC vote likely

• Voters cast ballots in Makerfield poll crucial to UK PM Starmer's future

GBPUSD


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

• FX options expire at 10-am New York/1400 GMT on Thursday 18 June

• EUR/USD: 1.1400-05 (1.1BLN), 1.1415-25 (775M), 1.1450 (2.74BLN)

• 1.1465-70 (518M), 1.1475-80 (792M), 1.1490-95 (483M), 1.1500-10 (14.7BLN)

• 1.1515-20 (575M), 1.1525-35 (1.2BLN), 1.1540-50 (3.73BLN)

• 1.1555-65 (805M), 1.1570-80 (2.3BLN), 1.1585-95 (1.2BLN), 1.1600-10 (3.3BLN)

• 1.1615-25 (2.3BLN), 1.1630-40 (6.04BLN), 1.1645-55 (5.4BLN)

• 1.1660-75 (1.92BLN), 1.1700 (1.7BLN)(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• Post-FOMC broad USD strength left USD/JPY bid but USD stronger elsewhere

• As a result, most JPY crosses saw bounces, fall from recent highs

• USD/JPY remained buoyant between 160.54-76 EBS, follows 160.79 high o/n

• Threat of Japan FX intervention again helped limit moves to the upside

• Verbal intervention from Chief CabSec Kihara in place of FinMin Katayama

• That said, Japan importer demand at Tokyo fixes continuing

• Offshore investors also continue to currency hedge Japan stock purchases

• Nikkei to fresh record high of 71,398.58 today despite Wall St plunges o/n

• Barring intervention, USD/JPY likely to remain in limbo on 160

• Specs still eyeing stops above 161.00, massive option KOs at 162.00, 165.00

• In expiries, massive $4.2 bln between 160.00-50 USD supportive

• Also massive $2.3 bln up between 161.00-10 to help cap

• EUR/JPY down a big leg to 184.78-185.06 EBS, from a high of 186.29 yesterday

• Moving back into 184.36-95 daily Ichimoku cloud, 100-DMA in cloud at 184.59

• Out of mkt range but E805 mln option expiries today between 185.95-186.00

• GBP/JPY fell to 213.14 overnight, Asia sees some bounce, 213.02 to 213.98

• 212.84-213.03 daily Ichimoku cloud proving supportive, 100-DMA 212.74

• CHF/JPY off to 200.50 o/n, Asia 200.55-99, around 200.94-201.03 daily cloud

• AUD/JPY 112.50-113.03, back into its 111.73-113.21 ascending daily cloud

• NZD/JPY 92.48-93.07 after fall to 92.45 overnight, lowest since May 6 92.21

• Daily Ichimoku cloud between 92.47-91 providing support for now

• Related comment , also , on flows

• On Kihara-speak , , for more click on [FXBUZ]

USD/JPY:


Nikkei 225:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD +0.3% Thur as risk sentiment improves after U.S. & Iran sign MOU

• Brent crude down 1.4%, Gold up 1.5% and equities broadly higher in Asia

• Pair still down significantly from Wed highs as Fed hike expectations build

• 9-Fed policymakers now expect at least one rate hike by the end of 2026

• AUD remains vulnerable overall, break of 0.6834 would confirm trend lower

• Range Asia 0.70135-35, support 0.6834, resistance 0.7089 0.7200
AUD Hourly Bollinger Study & DXY Daily 55-DMA

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

• USD/JPY remained better bid overnight, trading up to 160.79 EBS

• Fed's hawkish hold and strong US retail sales helped

• Seems Fed dot plots now almost assuring market of a rate hike ahead

• USD bid across the board, USD/JPY upside limited on intervention risk

• 161.00 the new line the sand for Japan's Finance Ministry?

• With large stops 161.00+, massive option KOs from 162.00, no doubt?

• BOJ Uchida's presser Tuesday also re-evaluated, take more hawkish?

• Whatever the case, USD/JPY likely to remain in 160 limbo barring FX action

• USD/JPY 160.54-64 so far in Asia, demand still on dips

• Large Japanese importers buys to continue at almost every Tokyo fix

• Offshore investors buying Japan equities to continue to hedge by yen sales

• Nikkei to fresh record high after TSE open despite Wall Street plunges

• Option expiries today to help contain spot action

• 160.00-50 total $4.2 bln, massive at 160.00, 160.50, 161.00-10 $2.3 bln

• Crude oil prices up overnight despite US-Iran deal, doubts peace to last?

• Related comments , ,

• Also , on BOJ , on US retail sales

• US markets , , ,

• On Fed , , ,

• On US-Iran , for more click on [FXBUZ]

USD/JPY:


Nikkei 225:


NYMEX crude oil futures:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Australian gold stocks fall as much as 2.8%, set to log its steepest intraday pct rise since June 11

• Sub-index snaps a four-day winning streak

• Bullion prices reversed course to drop more than 1% after the U.S. Federal Reserve held interest rate steady but hinted at a hike later this year, pushing the dollar higher. [GOL/]

• Shares of Northern Star Resources and Evolution Mining slipped over 2.5% each and were among the worst performers in the S&P/ASX 200 index

• Sub-index down ~8%, YTD
(Reporting by Anjali Singh in Bengaluru)

• NZD/USD -1.0% from Wed 0.58345 high after Fed officials flag FFR hikes

• Better than anticipated NZ GDP update giving some relief to the pair

• NZ Q1 production-based GDP +0.8% q/q (poll +0.8%), +1.5% y/y (poll +1.1%)

• FOMC left FFR range unchanged, but 9-policymakers expect to hike this year

• 2-year UST yields +14 bps, DXY +0.8% and U.S. equities soften in response

• Iran & U.S. both sign MOU, will work on peace agreement detail over 60 days

• NZD targets 0.5681 support after Mon's failure to break above 0.5867 55-DMA

• Range NZ 0.57535-0.5808, support 0.5680 5580, resistance 0.5990-95 0.6012
NZD Daily 55-DMA

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

• AUD/USD -0.9% from Wed 0.70755 high after FOMC leaves FFR range unchanged

• Nine Fed policymakers now expect at least one rate hike by the end of 2026

• 2-year UST yields +14 bps, DXY +0.8% and U.S. equities soften in response

• Preliminary peace agreement signed by both Iran and U.S.

• AUD trading near lower hourly lower Bollinger band, progress lower may slow

• Pair remains vulnerable to downside, break of 0.6834 would accelerate move

• Overnight range 0.6995-0.70755, support 0.6834, resistance 0.7089 0.7200
AUD Daily 55-DMA


AUD Hourly Bollinger Study & DXY Daily 55-DMA

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

Bank of America Global Research previews the June BoE meeting on Thursday.

"We expect the MPC to vote 7-2 for a hold, with Pill and Greene voting for a hike. Pill voted for a hike in April while Greene has recently argued that the case for hikes is growing and noted that risk of acting is less severe than that of failing to act," BofA notes.

"We think there are risks for a 6-3 with potentially Mann (or Lombardelli) voting for a hike, though the guidance from her has been less explicit. Mann's paragraph was hawkish in April where she said she expected greater additional second round effects than in the scenarios and continued rising inflation outturns/expectations can tilt her to a hike. But she has also pointed to tighter financial conditions," BofA adds.

• NY opened near 1.1600 after 1.1617 traded overnight, EUR/USD slid in early NY

• USD buying, US yield gains & USD/CNH lift off its low weighed on EUR/USD

• Rally in oil also helped pressure EUR/USD down, 1.1580 was neared

• The pair lifted slightly as USD buying abated, oil dipped & the Fed decision approached

• EUR/USD fell sharply on Fed removing "easing bias" reference, projected 2026 hike

• USD & yields rallied sharply while stocks, gold and silver traded lower

• EUR/USD fell to 1.1545 shortly after the statement, was down -0.48% into Warsh's presser

• The slide extended to 1.1536 during Chair Warsh's presser as USD buying persisted

• Bears ceded some grornd as USD buying abated, the pair neared 1.1555, was down -0.46%
eurusd


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

• NY opened near 0.7560 after AUD/USD drifted downward in Asia & Europe's morning

• The pair rallied in early NY despite firmer USD yields & USD/CNH's lift off its low

• The pair traded 0.7076 then stalled; gains in gold & silver helped AUD/USD move up

• Drops in stocks & AUD/JPY helped stem the rise but the pair held onto gains

• AUD/USD was in positive territory & sat near 0.7075 ahead of the Fed's policy decision

• Pair spiked lower as Fed removed "easing bias" reference", projections show hike in 2026

• US yields added to gains, stocks , gold & silver moved downward

• AUD/USD hit 0.7040 after the statement, latest SEP was down -0.28% into the presser

• During Chair Warsh's news conference USD buying persisted, AUD/USD neared 0.7030

• The pair then bounced, sat near 0.7055 late, traded down only -0.029%
audusd


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

• GBP$ soft in NY afternoon trade -0.54% at 1.3357; NorAm range 1.3418-1.3350

• Flows light in NY pre-Fed hold, Fed inflation concerns likely keep rates elevated

• UST yields higher owing to high inflation bias; stmt not much different than other c.banks

• Fed projections see 25bp hike in '26, followed by 25bp cut in '27/'28

• Geopolitical concerns ebbing, but remain fluid heading into phase 2; oil holds near lows

• Pair remains anchored near middle of 1.33-1.35 range; Thursday BoE moves into focus

• Today's UK CPI a touch beloow f/c may allow BoE to embark on less-hawkish policy path

• UK 10-yr gilt lower relieves some fiscal angst; post-BoE Makerfield by-election in focus

• GBP$ supt 1.3350 post-Fed hold low, 1.3325 daily low June 11, 1.3293 lower 30-d Bolli

• Res 1.3385 falling 10-DMA, 1.3522 daily cloud base, 1.3481 50% Fib of 1.3658-1.3304

GBP$ Chart:


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

• USD/CAD keeps grinding higher, printing fresh YTD highs at 1.4035

• Warsh’s first Fed presser is the key event risk; tail risk is a hawkish leann

• A hawkish surprise could see USD/CAD probe 1.4100 in short order

• CAD also faces a separate headwind from USMCA uncertainty into the July 1 deadline

• Bias remains tilted higher for USD/CAD near term, with CAD looking set to underperform

• Prior resistance-turned-support sits at 1.3920/67, with the 200DMA below at 1.3820
CAD daily chart


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

Morgan Stanley Research previews the UK labor report on Thursday.

"After a level shift higher in March, we expect the jobless rate to remain at 5.0% in the three months to April, before rounding up to 5.1% in the next month's reading. We forecast a revised April payrolls change at -10k and May at -25k. In addition, we see vacancies as slipping to just below 700k in the three months to May," MS notes.

"On earnings, the AWE data suggests compositional effects are as negative as -0.5pp but there is a decent degree of uncertainty around the data. Mindful of this, we model the private sector regular AWE growth in April just about rounding down to 2.9%3M/Y, with whole economy ex-bonus pay growth coming in at 3.3%3M/ Y. We see total pay growth at 4.0%3M/Y, as some of the recent strength in bonuses as measured by AWE cools," MS adds.

• EUR/GBP holds above recent range lows at 0.8600–20, preserving a modest topside bias

• However, price action lacks conviction as rebounds remain shallow

• Rate spreads & softer energy prices continue to point to higher EUR/GBP

• Despite this, market remains anchored within the well-defined 0.8600–0.8700 range

• Near-term GBP event risk elevated: BoE decision and Makerfield by-election (Thursday)

• Skew of risks leans GBP-negative on potential for a marginally more dovish BoE outcome

• Political backdrop also in focus - by-election fallout hinges on potential leadership pressure on Starmer

• Initial resistance at 0.8650–60, with a further hurdle at 0.8700
eurgbp vs factors


EURGBP daily chart


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

Societe Generale Research discusses USDJPY technical outlook.

"USD/JPY has staged a steady up move after defending a multi-month ascending trend line near 155.50/155 (now at 157). The pair is now challenging the peak of April around 160.70/161.20, which is an interim hurdle. A short-term pullback is likely, the trend line near 157 is an important support," SocGen notes.

"A cross above 160.70/161.20 will be crucial for confirming an extension of the up move. In such a scenario, the next objectives could be located at 2024 high of 162 and projections near 163.70," SocGen adds.