• USD/JPY breaks from the pack, untouched by the USD selling pressure hitting other currency pairs

• Pair stays range-bound, reinforcing bias to stay short USD/JPY option gamma as realised vol remains pinned

• 1-month implied vol just 7.40 - front-dated tenors trapped in a tight range, barely reacting to broader USD sell-off

• Surface still firm though: 1-month 25d risk reversals at 1.90 JPY calls over puts - between 1.85-2.0 this week

• This downside USD/JPY skew looks driven entirely by intervention risk, not genuine conviction to sell USD/JPY outright

• Divergence highlights that the FX options market still not treating JPY as a clean USD-weakness beneficiary

• Related comment - USD put demand stalls as Bessent bid unravels
USD/JPY 25 delta risk reversals


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