Credit Agricole CIB Research discusses the scope for another round of JPY intervention by Japan's MoF.

"BoJ Governor Kazuo Ueda was on the hawkish side yesterday indicating that a June rate hike is likely but not guaranteed. But with Japan's rates market already over 80% price for a June hike, the JPY's upside from Ueda's hawkishness as well as a June rate hike is limited. We maintain this would only change if the BoJ were to perform a hawkish hike indicating investors would not have to wait another six months for another rate hike...So it appears that even the BoJ is joining the fight to defend the JPY. The main support for the JPY, however, remains the threat of and/or actual intervention," CACIB notes.

"To maintain credibility, the MoF would have to trigger another round of intervention if USD/JPY were to significantly breach 160, even though it would likely be fighting fundamentals. Oil prices remain elevated as does the US-Japan short-term rates spread," CACIB adds.

Bank of America Global Research highlights the key themes for its latest G10 FX flows and positioning report.

"USD buying vs JPY and EUR has been the key theme in G10 FX flows since the start of the Middle East conflict (Exhibit 1). Notably, options and futures flows have continued to support the USD even post-ceasefire, likely reflecting strong US data," BofA notes.

"Our positioning signals point to risks around AUD longs and NZD, JPY, and GBP shorts. EUR positioning appears light and, within G4 FX, we tactically favour USD longs against it," BofA adds.

• AUD/USD traded up slightly, pair traded 0.7123-0.7138, was up +0.10% early NY

• Drops in USD, US yields , oil , UDS/CNH helped prop up the pair

• Gains in gold , silver & copper also helped the pair trade up

• AUD/USD remains in its recent 0.7080-0.7200 range ahead of US May jobs data Friday

• Pair hemmed in by the 10- & 21-DMAs on top & the 55-DMA, daily cloud top down below

• June's price drop following May's doji could be a concern for AUD/USD bulls

• US weekly and continuing jobless claims are data risks in NY's morning
audusd


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

June 4 (Reuters) - FX traders should beware that GBP/USD's momentum reading recently turned positive, in a month where spot usually climbs, increasing the likelihood of the market closing in positive territory in June this year.

GBP/USD performance for each June since 2000 shows it has risen in 16 of the last 26 years, or 62% of the time. Seasonality should not be considered in isolation, but it's a useful tool combined with other factors. The pound was little changed on Thursday as markets remained focused on the uncertain outcome of U.S.-Iran peace talks.

Cable's 14-day momentum reading turned positive on Wednesday, highlighting a shift in technical bias to upside despite Wednesday's drop.

There is scope for GBP/USD to rise to test the May 25 1.3509 peak, a break above which would unmask the 1.3658 May 1 high and then the 1.3700 Fibo, a 76.4% retrace of the 1.6867 to 1.3160 (January-March) drop.
Momentum Chart


Daily Chart


Seasonality Chart


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

• EUR/USD pressured by recent broad based USD gains and souring risk sentiment but still well contained

• Tight 1.1595-1.1615 range so far Thursday, Matches Wed's low. Support May 28/22 lows 1.1587-77

• Daily cloud 1.1629-83 now adding resistance, with 21-55 dma's around 1.1660 and key 200-dma 1.1682

• FX option implied volatility sits just above recent and 2026 lows - little perceived realised FX volatility risk embedded

• Risk reversals have increased EUR put over call vol premium to 0.375 - recognising raised downside risk to spot

• Huge FXO expiries continue to dominate - effect amplified with markets mostly sidelined into Friday's NFP data

• Related comment - Are FX markets underpricing June Fed risk?
EUR=EBS


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

• Yen trades circa the key 160 level that keeps traders on intervention alert

• USD/JPY has seen a 159.59-160.09 range, on Thursday, according to EBS data

• An internal model shows USD/JPY should be trading well above 160

• There is scope for gains to retest the 2026 160.72 peak

• A break above 160.72 peak would put the Japanese authorities under pressure to act

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

Daily Chart


Correlation Chart


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

• USD/JPY FX option premiums spiked higher as spot tests BoJ intervention resolve at 160.00

• Implied volatility higher - 1-week expiry jumped 5.0 to 7.0, 1-month from 4-year low at 6.3 to 7.3

• 1-week 10 delta butterfly spread high since 2020 at 2.9, 1-month 10 delta since 2022 at 1.8

• Risk reversals keep a high JPY call over put risk premium despite higher spot as intervention hedge

• Dealers also note demand for 161.00-162.00 strikes to hedge topside breakout if BoJ decide to wait

• Next big event is Friday's NFP - overnight USD/JPY implied vol gains exceed peers to flag heightened FX risk
USD/JPY 10 delta butterfly spreads


USD/JPY FX option implied volatility


Overnight expiry FXO implied volatility


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

• USD/JPY sees very quick blip down from 159.99 to 159.59 EBS

• Case of market jitters, BOJ rate check, actual FX action?

• Nothing yet to suggest intervention but market jittery

• Hourly Ichimoku cloud between 159.70-87 crisscrossed

• Tech support below from ascending 200-HMA at 159.44

• Loads of option expiries today too down to 159.00, below

• Related comment , also , for more click on [FXBUZ]

USD/JPY hourly:

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

• GBP/USD unchanged in Asia after closing 0.35% lower on Wednesday

• Consolidation likely; on-again, off-again Iran peace talks tire investors

• Israel, Lebanon agree to implement ceasefire boosting Iran deal hopes

• WTI crude down 1.25%, U.S. 10-year yield -1 bp Thursday, support GBP

• Focus shifts to U.S. jobs data Fri as Fed rate hike expectations rise

• BoE's Bailey speaks; last week said no need to act quickly on inflation jump

• 1.3350-1.3500 range trading to continue; support 1.3400-05, 1.3370-75

• Resistance 1.3460-70, 1.3500; Wed range 1.3412-1.3470, Asia 1.34135-1.3431
GBP:

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

June 4 (Reuters) - Markets should consider the risk of a double whammy from a Bank of Japan interest rate hike at the June 15-16 Policy Board meeting and possible FX intervention, given signs Prime Minister Sanae Takaichi may be on board for such moves. The prime minister said as much Wednesday, adding to the chorus from Ministry of Finance officials including Finance Minister Satsuki Katayama , . The market believes MOF is merely biding its time, waiting for the right moment, likely when it perceives the market has become sufficiently long USD/JPY and short the yen. USD/JPY has recently traded back to 160.00, touching 160.09 on Wednesday and early in Asia Thursday. The market, sensing heightened intervention risk, has for now resisted pushing USD/JPY higher during the Tokyo trading day. As for the BOJ, Governor Kazuo Ueda's hawkish comments Wednesdayappear to have cemented expectations of a 25-basis-point hike later this month . Ueda failed however to telegraph a move at the July 30-31 meeting, suggesting the government may not be on board for another rate hike so soon after a June tightening. This seems to be the quandary for Japan. In the absence of the BOJ telegraphing more rate hikes sooner rather than later, any MOF-ordered FX intervention would have only a limited and possibly very temporary impact, as was the case at end-April, early May.

Related comments , , , , , . For more click on [FXBUZ]

Bank of Japan benchmark interest rate:

Japan has recently had some success with currency interventions:



USD/JPY:

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

• AUD/USD +0.1% Thur, activity subdued as markets calibrate Iran developments

• AU Apr balance on goods +1.79 bln (poll +1.8 bln), exports +7.2% m/m

• RBA officials Bullock, Hunter & Kent appear before Senate Committee 0500 GMT

• Iran war re-escalation keeps sentiment subdued, DXY +0.3% from Wed 99.19 low

• U.S. says Lebanon & Israel agreed to ceasefire, but markets remain sceptical

• AUD 0.7080-0.7200 channel tough to break without new catalyst

• Range Asia 0.7126-375, support 0.7080 0.6834, resistance 0.7200 0.7283
AUD Daily 55-DMA


DXY Daily 55-DMA

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

• USD/JPY up to 160.09 EBS overnight, no Japan FX intervention - yet

• Market still on intervention watch however, Asia range so far 159.83-160.09

• Market obviously wary though probes higher will likely continue

• For now, profit-taking interest from longs, Japanese exporters up top

• Demand still eyed on dips however - from Japanese importers into Tokyo fix

• Institutional and retail specs bids likely too, foreign hedging interest too

• Latter could be less today with Nikkei off after TSE open, Wall St down o/n

• Higher US yields USD supportive, JGB-US Tsy rate differentials tad wider

• Massive option expiries on deck today, both above and below, from 158 handle

• On 159 total $11.4 bln, on 160 $5.8 bln, $3 bln alone at 160.00

• Likely on positioning ahead of US jobs report tomorrow

• BOJ Gov Ueda signalled rate hike late yesterday but already discounted

• Up to MOF to decide whether intervention warranted, plenty JPY shorts now

• US-Iran tensions still but signs of progress? More bluster?

• Related comments , , ,

• Also , Ueda-speak

• On Japan FX action ,

• US markets , , ,

• On US economy , , on Fed ,

• And , for more click on [FXBUZ]

USD/JPY:


USD/JPY nearby option expiries into next week:

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

• NZD/USD -1.1% from Thur 0.5935 high as flaring U.S.-Iran hostilities weigh

• U.S. strikes Qeshm Island & Iran hits Kuwait's airport in fresh engagements

• USD index +0.3%, WTI +1.9% to $95.30 a barrel and U.S. equities soften

• U.S. State Department says Lebanon & Israel agreed to ceasefire

• U.S. initial jobless claims due Thur, Reuters poll consensus 213k

• NZD nearing 0.5861 55-DMA, break below 0.5615 support will accelerate rout

• Range NZ 0.58585-74, support 0.5815 0.5680, 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 -0.7% late Wed as Middle East war re-escalation dampens sentiment

• Iran hits Kuwait airport; U.S. strikes Qeshm Island; Israel attacks Lebanon

• DXY gains 0.3%, WTI +2.6% to $96.20 a barrel and U.S. equities soften

• AU Apr balance on goods due 0130 GMT, Reuters poll consensus +1.8 bln

• RBA officials Bullock, Hunter & Kent appear before Senate Committee 0500 GMT

• AUD trading towards lower hourly Bollinger band, downside momentum may slow

• Overnight range 0.7127-765, support 0.7080 0.6834, resistance 0.7200 0.7283
AUD Hourly Bollinger Study & DXY Daily 55-DMA

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

JP Morgan flags a scope for further AUD/NZD gains on a daily close above 1.2134.

"Q1 GDP for Australia came in lower than expectations at 0.3%, which saw AUD underperform on crosses, although interesting not against the bird, with AUDNZD bouncing 40 points off the lows," JPM notes.

"If AUD/NZD can close above the 50D ~1.2134, this would suggest further gains towards the recent highs just below 1.2300," JPM adds.

• GBP$ soft in NY afternoon trade, -0.35% at 1.3418; NorAm range 1.3455-1.3416

• Mideast peace prospects dim as US, Iran trade hostilities, oil rises

• Front and long-end UST yields move higher as oil rise portends inflation persistence

• Ratewise, BoE indicated w/2-25bp hikes in 2026; Fed 80% odds for Dec 25bp hike

• USD slight bid as hawkish Fed a recent development; BoE in no hurry to hike

• For all the noise, GBP$ stuck in middle of recent 1.33-1.35 range awaiting news/data

• GBP$ supt 1.3416 Wednesday low, 1.3393 daily cloud base, 1.3344 lower 30-d Bolli

• Res 1.3451 bruised daily cloud top, 1.3477 100-DMA, 1.3509 daily high May 25

GB P Chart:


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

• NY opened near 1.1615 after 1.1634 traded overnight, the pair fell in NY

• EUR/USD was weighed down by broad-based USD buying, USD/CNH neared 6.7820

• Rise in US yields , oil & wide spreads

added weight

• Drops in gold, silver and equities also weighed as those helped lift the USD

• EUR/USD broke the up trend line off the March 16 low, hit 1.1595, was down -0.29% late

• Techs lean bearish; pair below 10-, 21-, 55- & 200-DMAs; RSIs indicate downward momentum

• Head and shoulder pattern forming on monthly chart adds to bearish sentiment
eurusd


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

• NY opened near 0.7170 after 0.7182 traded overnight, drop extended in NY

• Broad-based USD buying, US yield & oil gains weighed

• The USD got an added boost from drops in gold, silver copper & equities

• AUD/USD fell below the 10-DMA, hit a 4-session low of 0.7130

• The pair held near that low late in the day, it traded down -0.67%

• Techs lean bearish; RSIs indicate downward momentum, pair below 10- & 21-DMAs

• Head & shoulder topping pattern forming on daily chart reinforces bearish signs
audusd


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

ANZ Research updates its ECB rates call.

"We now expect the European Central Bank (ECB) to hike 25bp in June and September, taking the benchmark deposit facility rate to 2.50%. While the chance of resolution in the Middle East prior to the ECB's next meeting on 11 June has increased in the past week, the situation remains fluid. Even in the case of a deal being struck between the US and Iran, the tail of disruption in energy markets will extend in Europe for many months," ANZ notes.

"Policymakers have guided that the ECB remains data-dependent, but as the magnitude and persistence of the energy shock has moved further away from the baseline scenario for headline inflation laid out in March, there is an increasing focus on managing that at the ECB," ANZ adds.

Bank of America Global Research previews the US May jobs report on Fridayu.

"May Jobs: We look for another upside NFP surprise (95k forecast vs. 85k consensus) with risks to the upside, and an unchanged unemployment rate of 4.3%. Education & health should continue to lead, followed by trade & transport and leisure & hospitality," BofA notes.

"Fed: Comfortably on hold, in line with our forecasts. Recent Fed-speak has leaned hawkish, but we expect the U-rate threshold for hikes is closer to 4.0%.

FX: USD paralyzed by geopolitical headlines recently, but a strong report could reassert," BofA adds.

The market may revert to dip buying in USD/JPY as central bank risks loom and intervention odds remain high.

Fresh FX warnings pushed the pair toward its 159.37 Tenkan-sen, but large option-related gamma is limiting downside and helping anchor spot just below 160, supported by higher oil and Treasury yields.

While heavy short yen positioning, a flattening JGB curve, and softer technicals -- including a thinning daily cloud -- leave room for a pullback, a clear catalyst is lacking. Moreover, BOJ Governor Kazuo Ueda struck a cautious, mildly hawkish tone that offers limited support for sustained yen strength. While highlighting risks of inflation overshooting and falling behind the curve, he stressed the need to carefully weigh further tightening with policy still highly accommodative. This balanced stance echoes past messaging and aligns with government growth priorities, providing little conviction for a durable yen rally unless higher yields undercut risk sentiment. An extended move above 160 might invite MOF intervention, particularly if the yen weakens after an expected June BOJ hike. The options market is already pricing both that risk and a potential shift into a sustained 160+ range once expiries and key events pass. A close below 158 may be needed to arrest bullish sentiment.
yen


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

Societe Generale Research discusses the scope for further waves of intervention by Japan's MoF to cap USD/JPY upside.

"Neither rate trends, nor growth prospects are pointing to a sustained yen recovery yet. The Bank of Japan has now spent something in the order of USD 240bn in FX intervention to cap USD/JPY, since mid-2022. USD/JPY has averaged 147 over that period. Given that at that price the yen has been, on average, 35% undervalued relative to purchasing power parity, this represents a huge effort to avoid something that once upon a time, economists thought could only happen temporarily. The challenge for the MOF and BOJ, is that despite 2-year JGB yields rising to their highest level since 1996, that’s still 2.7% below Treasury yields. The 1-year yield differential has narrowed, from above 4% to below 2%, but it too, remains big enough to keep Japanese investors in Treasuries. There is, therefore, a danger that the current unstable equilibrium (super-cheap yen, rising Japanese yields) can be sustained for a while longer," SocGen notes.

"It is much easier to imagine a significant yen revival in the event of a protracted period of slow (or no) US growth, than in imagining Japan can grow fast enough to life the yen on its own. In short, for now, intervention to cap USD/JPY is likely to continue but hoping for a turn in the USD/JPY trend, back towards 150 and beyond, is unrealistic," SocGen adds.

Goldman Sachs Research previews the US May jobs report on Friday.

"We forecast a 60k increase in payrolls (vs. 89k consensus) in May. Big data indicators of job growth slowed, and government is likely to be a 5k net drag. We expect the unemployment rate to remain unchanged at 4.3%," GS notes.

"While continuing claims have fallen further, the unrounded unemployment rate was 4.34% in April, and the May unemployment rate appears to suffer from modest positive residual seasonality. We forecast a 0.4% increase in average hourly earnings, reflecting positive calendar effects," GS adds.

• Cable has traded a 22.5 pip range since the London open; 1.3439 is session low

• 1.3407-1.3485 marks the traded range since Friday (May 29)

• UK May services PMI upwardly revised to 49.3, from 47.9 flash estimate

• Five-year gilt yields rise to their highest level since May 22

• U.S. May ADP jobs data, ISM services index ahead; 117k and 53.8 forecast

• May 3, 2029 is one of the most likely dates for the next UK general election

GBPUSD


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