Bank of America Global Research provides the latest investors feedback on JPY intervention.

"For the first time in years, we didn't meet a single yen bull during our mid-year investor meetings last week, consistent with speculative yen shorts close to 20-year highs. Investors do not expect intervention to be effective in keeping USDJPY below 160," BofA notes.

"Pushback on our cautiously optimistic view on JPY, premised on more balanced flows, focused on Japan's reflationist policy, including the government's vocal stance on monetary policy. Investors do not think we are yet at pain thresholds in USDJPY and JGBs that would lead to a more prudent policy mix," BofA adds.

EUR/USD staged a rally that pushed the pair above its 21-day moving average to a five-session high, but the advance faltered as buyers failed to sustain the upward momentum. This loss of steam has generated technical warning signs pointing to potential downside risk, particularly with key U.S. inflation data due next week.

Adding to the bearish tone, fresh technical signals appeared on the daily chart, including a bearish RSI divergence at today's peak and the formation of an inverted hammer candlestick pattern. These new signals reinforce pre-existing bearish indicators, namely the rising channel pattern on daily charts and a monthly chart structure suggesting the pair is merely consolidating its decline from June's monthly high rather than reversing it. Meanwhile, Bollinger Bands on the monthly timeframe have narrowed over a 15-month period, hinting the pair could stay rangebound—though this could change quickly if U.S. CPI data injects fresh volatility.

Market expectations point to June core CPI ticking up to +0.3% month-on-month from +0.2%, with the year-on-year rate holding steady at 2.9%. A stronger-than-expected reading would likely boost the dollar, yields , and rates on expectations of a more hawkish Fed, potentially driving EUR/USD below the rising channel's base and June's low, triggering stop-losses and pushing the pair toward support near 1.1050-1.1100. Conversely, a softer CPI print could weaken the dollar and rates, lifting EUR/USD and possibly invalidating the bearish technical setup.
eurusd


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

ANZ Research previews next week's US June CPI report and the USD outlook around the release.

"Next week’s June CPI release is the key data point ahead of the July FOMC meeting and will determine whether markets build additional Fed tightening expectations or extend the recent consolidation. Markets are likely to look through any energy-driven boost to headline inflation if underlying price pressures remain contained," ANZ notes.

"Scenario 1: CPI in line with or below expectations (base case) Lower energy prices and easing geopolitical risks have reduced near-term inflation pressures. As such, a CPI print in line with or below expectations is unlikely to meaningfully shift Fed pricing. Also, we expect June’s core CPI to have risen by 0.2% m/m, leaving annual core inflation at 2.8% y/y. While inflation data may remain volatile in coming months, an in-line June outcome should be largely a non-event for the USD and keep the DXY broadly confined to its recent 100.5–101.5 range.

Scenario 2: CPI above expectations A stronger-than-expected core CPI print would reinforce concerns that inflation remains sticky and prompt markets to bring forward or increase Fed tightening expectations. This would support the USD. This can take the DXY towards touching 102, particularly if followed by a firm PPI print, increasing confidence in a more hawkish Fed path. CFTC non-commercial positioning show that net longs have increased. EUR longs continue to decline, while most other G10 currencies remain net short, underscoring the market's preference for the USD," ANZ adds.

Goldman Sachs sees a scope for FX carry strategy to outperform over the coming months 

"We argue that carry bears more relevance for G10 FX markets now than it has at virtually any other point since the year 2000, and we continue to see value in carry strategies funded by G10 low-yielders (JPY, CHF, EUR, CAD) in the months ahead," GS notes.

"G10 FX currently boasts the combination of historically elevated levels of outright carry, and historically subdued levels of vol. A stabilisation in G10 policy rates at high and varied levels following the post-Covid inflation surge and recent energy shock has helped allow for this dynamic, but in practical terms for FX markets, it has produced exceptionally high levels of carry-to-vol currently, including near multi-decade highs for the likes of EUR/CHF and USD/CAD.  

We view the opportunity to earn carry in G10 FX while remaining relatively insulated from (or even hedged against) drawdowns in risk as a useful option in multi- asset portfolios in the current backdrop," GS adds.

• EUR/USD rallied above the 21-DMA overnight, hit a 5-session high of 1.1461

• General selling of USD and USD/CNH's drop helped prop up EUR/USD

• The pair then began giving back some of the overnight gains as USD firmed up

• US yield gains & drops in gold, silver contributed to the USD recovering

• EUR/USD fell below the 21-DMA, sat near 1.1435 in early NY, was up only +0.03%

• A daily inverted hammer candle formed which could be a concern for bulls

• EUR/USD trading in a rising channel on daily charts may also be worry bulls
eurusd


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

• AUD/USD rallied sharply overnight, hit a 13-session high of 0.6969

• Broad-based USD selling & USD/CNH drop below 6.7770 buoyed AUD/USD

• Sellers emerged however as USD, US yields firmed up

• Drops in gold and silver helped the USD recover some losses

• AUD/USD pulled back, slid back below the 21-DMA, neared 0.6950 into NY's open

• The pair was up only +0.10% after turning away from 0.6980/0.7010 resistance

• Rising RSIs, AUD/USD's hold above the 10- & 200-DMAs give bulls some comfort

• A daily inverted hammer candle formed which may be a concern for bulls
audusd


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

July 10 (Reuters) - EUR/USD risk reversals are FX option structures that benefit from volatility in one direction over the other, and in the right environment they can generate steady premium. Just as importantly, shifts in their pricing offer the FX market valuable clues about directional risk sentiment.

FX options are forward-looking instruments that thrive on volatility. Because actual volatility is unknown — yet central to an option’s premium — dealers use implied volatility as a proxy. Risk reversals typically show an implied-volatility premium in the direction where dealers expect volatility to rise, and a discount in the other.

Trading a risk reversal involves owning a strike in one direction and selling a strike in the opposite direction. Buyers of risk reversals want spot to move in that direction, lifting implied volatility and boosting the option’s value. At the same time, the strike they’ve sold should lose value, allowing the entire position to be closed for a profit.

Changes in those directional premiums can reveal shifts in how the market perceives the path of a currency pair — or signal rising risk of a directional break. We saw this in EUR/USD amid fears of a re-escalation in the Middle East conflict this week, with the benchmark 1-month expiry 25 delta risk reversals widening their EUR put over call risk premium (downside over upside strikes) to 0.45 from 0.35. This rise in premium — and the sentiment signal it carried — proved justified, as EUR/USD implied volatility increased from 4.9 to 5.3 as EUR/USD slipped below 1.1400 earlier this week. What's interesting is that despite EUR/USD moving back to the low-mid 1.14's, the 1-month risk reversal has retained that firmer downside strike premium, which suggests the options market remains alert to the risk of more EUR/USD weakness and implied volatility gains.
EUR/USD 25 delta risk reversals


EUR/USD FXO implied volatility


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

The JPY snapped back from four-decade lows on Thursday after Finance Minister Satsuki Katayama said Tokyo wants pension funds—including the Government Pension Investment Fund, the world's largest with ¥293.4 trillion ($1.81 trillion) in assets as of December—to boost allocations to domestic assets "substantially." Given GPIF's outsized influence on institutional asset allocation trends, the comments were read as a signal of official discomfort with yen weakness, and USD/JPY firmed over 0.5% to 161.45, easing some of the JGB yield pressure that had built up on fears the Takaichi administration's fiscal expansion could compromise BOJ independence.

The options market moved quickly to reprice risk. Short-dated implied volatility spiked initially—1-week into the mid-6s and 1-month from 6.6 to 7.0—before sellers stepped back in as spot stabilized, a classic pattern of event-driven vol buying followed by profit-taking once the immediate move plays out.

The more telling shift was directional. Demand resurfaced for sub-160.00 strike JPY calls, and the 1-month 25-delta risk reversal—already elevated to reflect the intervention risk that has haunted the market since late April—richened further from 1.4 to 1.5 in favour of JPY calls over puts. That skew reflects a market still pricing meaningful tail risk of a sharper JPY rebound, whether driven by verbal intervention, actual MOF/BOJ action, or a genuine reallocation wave from institutions like GPIF.

Yet the trade in butterfly spreads told a more nuanced story. The drop in wing premium—1-week 10-delta butterflies down to 2.25 and 1-month to 1.45, both well off recent multi-year highs—suggests dealers are pricing less tail risk of an explosive, disorderly breakout in either direction. In other words, the market believes Katayama's jawboning has capped near-term upside risk in USD/JPY without necessarily triggering a violent reversal.

Net effect: JPY has found a firmer floor, vol curves have flattened somewhat at the wings, but the persistent bid for JPY calls confirms traders remain focused on the ever-present intervention risk—just less convinced the next leg lower in USD/JPY would be disorderly.
USD/JPY 25 delta risk reversals


USD/JPY 10 delta butterfly spreads


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

• Cable rose to 1.3452 in Asia as dollar fell vs yen on Japanese pension fund news

• 1.3452 is the highest level since June 15 (1.3460 was the high that day)

• Thursday high was 1.3430, after more short-covering (CFTC data due at 1930 GMT)

• 1.3140 was seven-month low on June 24. Pullback low from 1.3430 was 1.3381

• Apollo Global trumps U.S. investor Castlelake with £5.7 billion easyJet bid

• Burnham set to replace Starmer as Britain's prime minister on July 20

GBPUSD


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

• AUD/USD up 0.3% to a 2-week high on JPY-led USD decline in Asia; DXY -0.3%

• Buoyed by positive risk sentiment; Iran-U.S. war fades into background

• Supported by broadly higher Asian stocks; Nikkei up 1.8%, ASX 200 +0.5%

• Bears exit short positions on lack of downside momentum

• Fed Chair Warsh's semiannual testimony next week eyed for policy clues

• AUD sales vs JPY and NZD limit rise; AUD/JPY sold on Japan Fin Min comments

• RBA/RBNZ rate expectations re-priced after hawkish RBNZ rate hike on Wed

• Resistance 0.6960-65, clear break opens 0.7000; support 0.6925-30, 0.6900

• Asia range 0.6934-0-.6969
AUD:

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

• AUD/USD up 0.1% as USD weakens broadly in Asia; DXY down 0.15%

• Boosted by positive risk sentiment, buoyant metals

• But AUD/JPY and AUD/NZD selling cap gains

• RBA/RBNZ rate expectations re-priced; AUD/JPY sold on Japan Fin Min comments

• Japan to seek greater GPIF, pension fund investment at home- Fin Minister

• AUD resistance 0.6960-65, 0.7000 support 0.6900-10, 0.6875-80

• Asia range 0.6934-0.6951
AUD/NZD:

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

• Australian mining stocks rise as much as 1.8% in early trade, while the broader benchmark trades flat

• Sub-index books largest intraday pct gain since July 1, on track to snap four straight days of losses

• Copper prices hit a more than two-week high after markets shrugged off recent attacks in the Middle East [MET/L]

• BHP and Rio Tinto up 1.7% and 2.7%, respectively

• Including the day's moves, AXMM up 7.4% YTD, outpacing a 0.6% rise in AXJO
(Reporting by Nikita Maria Jino in Bengaluru)

• AUD/USD likely to remain bid on dips as risk sentiment improves

• Lower oil prices support as fears of prolonged Middle East conflict ease

• Copper rises 2.6% to a 2-week high, gold up 1.1%, buoy AUD

• Rally capped by AUD/NZD sales as RBA/RBNZ rate expectations are re-priced

• Pair closes below 100-day MA for the 1st time in a year, more downside seen

• 1.1955, June 1 low and 1.1810, 200-day MA attract; Thu range 1.2041-1.2191

• AUD support ay 0.6900-10, 0.6875-80, resistance 0.6960-65, 0.7000

• Thursday range 0.6926-0.6947-

AUD/NZD:

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

• USD/JPY essentially sideways on 162, Asia so far today 162.34-43 EBS

• Nervousness over Japan FX intervention still limiting moves to upside

• Demand strong from Japanese importers, retail and on maybe more NISA flows

• Foreign buyers of Japanese stocks to continue to hedge currency risk

• USD/JPY back into its hourly Ichimoku cloud between 162.18-48 currently

• Cloud moving sideways, ascending 100-HMA 162.20 and 200-HMA 162.08 below

• Option expiries today skimpy, some large 161.12-20, 162.50-90

• Little change in JGB-US Treasury rate differentials, 2s @274, 10s 169 bps

• Could be quiet into the weekend with little in way of fresh news

• US-Iran hostilities to remain focus but crude oil prices off after rallies

• Related comments , , , also

• US markets , , ,

• On the Fed , , ,

• On US yields , economy ,

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

USD/JPY daily:


USD/JPY hourly:


Nikkei 225 daily:

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

Danske Research discusses its Fed rates trajectory after the July FOMC minutes.

"EUR/USD remained firmly in the 1.1400-1.1450 range yesterday despite the sharp uptick in energy prices. The session was characterized by mixed news headlines regarding the future of peace negotiations with Iran, which remains unclear. Short-end EUR and USD rates have risen largely in tandem, driven primarily by higher inflation expectations. This contrasts with late June, when higher USD real rates supported broad USD FX, while yesterday the DXY index even declined modestly. The stability is also visible in option markets, where 3-month ATM implied volatility rose only very modestly, and remains well below its long-term median level. Risk reversal skews shifted ever so slightly in favour of more expensive USD calls," Danske notes.

"Last night, the minutes from FOMC's June meeting offered no major surprises. The format of the minutes did not receive similar changes as the statement (the document was still 15-pages long vs. 18 pages in April). The minutes offered no clear guidance for or against a July hike, but continued to emphasize uncertainty over future inflation and the importance of incoming data. We continue to forecast 2x25bp hikes from the Fed (current pricing: 45bp), but only later at the December and March meetings," Danske adds.

• GBP$ firm in NY afternoon trading, +0.18% at 1.3412; NorAm range 1.3414-1.3389

• Pair remains anchored to 1.34, after falling from European session high 1.3430

• Despite pickup in Mideast tensions oil falls 2% may tell true story of peace outlook

• No changes in Fed, BoE rate expectations after IJC data indicates steady US labor mkt

• GBP's recent bid hints significant IMM net spec short unwinding

• GBP$ res 1.3430 Thursday high, 1.3460 daily cloud top, 1.3513 upper 30-d Bolli

• Supt 1.3381 Thursday low, 1.3323 rising 10-DMA, 1.3276 daily low July 2

GBP Chart:


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

• NY opened just above the overnight 1.1417 low, the pair then rallied

• Downward moves in USD, US yields , oil boosted EUR/USD

• Rallies in gold, silver and stocks weighed on USD and helped rally riskier assets

• EUR/USD hit 1.1445 then neared 1.1435 late, the pair traded up +0.18%

• Rising daily RSI, hold above the 10-DMA are encouraging signs for EUR/USD bulls

• Hold below the 21-DMA, rising channel on daily charts are concerns for bulls
eurusd


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

• NY opened near 0.6930 after AUD/USD held a tight 0.6926-0.6945 range overnight

• The pair rallied in NY due to upbeat risk sentiment & soft USD, US yields

• Gains in gold, silver, copper, equities & UDS/CNH's drop to 6.7935 buoyed risk

• AUD/USD hit 0.6947 and held nearby late in the day, the pair traded up +0.22%

• Daily RSI, AUD/UD's hold above the 10- & 200-DMA are encouraging signs for bulls

• AUD/USD's hold below the 21-DMA, 0.6980-0.7010 resistance are concerns for bulls
audusd


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

JP Morgan likes selling CHF on rallies in the near-term.

"Risk was on the back foot yesterday following Trump comments suggesting the ceasefire was over. This gave the greenback a heavily bid tone in the London session, with USDCHF trading above 0.8100, but the move was short-lived and the pair is now back around 0.8060," JPM notes.

"Our CHF view is unchanged: we're happy to sell the franc on rallies versus the dollar, using it as a hedge against higher-beta longs elsewhere," JPM adds.

Sterling's underlying bullish tenor remains intact even as intensifying Middle East tensions and mounting Fed concerns over persistent inflation dominate the policy conversation, keeping GBP/USD hovering near 1.3389 after clawing back from late-June lows.

The UK political backdrop, while still fluid, has become somewhat less unsettling since PM Keir Starmer's resignation; the picture now turns on the resignation of Reform Party leader Nigel Farage and his subsequent reelection bid, which keeps a residual risk premium in the pound but no longer dominates price action.

Fundamentally, with UK political, monetary and geopolitical drivers stabilizing, the deeply short sterling IMM net spec position looks ripe for unwinding, a dynamic likely to keep the pair anchored near trend highs. As of the June 30 IMM release, sterling shorts stood at roughly 102k contracts, about +$8.47bn, a touch shy of 9-year extremes at -107k contracts. Barring a fresh escalation in geopolitical tensions that drives oil back above $100/bbl and rekindles UK and global inflation, the risks that could force a meaningful move lower appear largely priced in; against such stretched positioning, a spec short-covering unwind should tilt the pair above recent trend highs.

From a technical standpoint, bulls are looking for a close within the daily cloud at 1.3409-1.3460, with a breakthrough targeting the upper Bollinger band at 1.3511. Conversely, bearish momentum may build if the pair closes below the rising 10-day moving average at 1.3323, with a decisive break beneath 1.3276 signaling a potential drop towards late-June lows around 1.3140. The current conditions suggest that GBP/USD could thrive in the face of uncertainty.
GBP Chart:


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

MUFG Research maintains its call for a final ECB hike in September.

"After attempting to break below the 1.1400-level again yesterday, EUR/USD has since risen back up to within touching distance of 1.1450 overnight. The euro has benefitted from the pullback for the US dollar after the FOMC minutes were less hawkish than feared, and the price of Brent dropping back below USD80/barrel overnight. At the same time, the euro-zone rate market has moved to price in a higher probability of further ECB rate hikes with the market leaning more towards two rather one final hike," MUFG notes.

"The hawkish repricing has been encouraged by the jump in oil prices yesterday triggered by renewed tensions in the Middle East, and hawkish comments from ECB officials. Governing Council member Joachim Nagel indicated that further hikes maybe required while expressing concern by the renewed tensions in the Middle East. At current energy price levels, we remain comfortable with our call for one final hike in September," MUFG adds.

AUD/USD edged higher on Thursday, but the move since June 30 looks more like a corrective bounce within a broader downtrend rather than a genuine reversal, meaning long positions in the pair now hinge on the upcoming U.S. June CPI report for validation.

Technically, the picture is mixed: AUD/USD sits above its rising 200-day moving average, a bullish signal, yet it is consolidating its decline from the June 15 high—a bearish sign. This consolidation is unfolding while the pair remains below its 21-day moving average and below key structural resistance in the 0.6980-0.7010 zone. If AUD/USD fails to break above this resistance soon, long holders may start exiting while bears add to short positions, a combination that could reignite the longer-term downtrend.

The critical catalyst is the U.S. June CPI report due Monday, July 14. If core inflation matches or comes in slightly below expectations, the U.S. dollar and Treasury yields

could fall as markets price in a less hawkish Fed , potentially fueling a sharp AUD/USD rally that clears the 0.6980-0.7010 resistance and targets the 0.7200 area.

Conversely, a hotter-than-expected inflation print could send the dollar and rates higher, triggering selling pressure on AUD/USD. In that scenario, the pair could break below its 200-day moving average and the June and March lows, shifting focus toward the 0.6675-0.6725 zone as the next downside target.
audusd


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

Bank of America Global Research discusses the scope for another round of JPY intervention by Japan's MoF.

"The rule of thumb that ¥1 trillion of intervention moves USD/JPY by roughly one yen appears broadly consistent with the April-May intervention episode  

For example, if intervention were to begin with USD/JPY in the 163s, pushing the exchange rate below 155-and thereby exceeding market expectations-could require intervention on the order of ¥10 trillion in a single day, or more than ¥15 trillion across multiple operations," BofA notes

"The hurdle for a Bank of Japan rate hike at the July meeting appears high, while the following policy meeting is not until mid-September. Against that backdrop, the possibility of more aggressive intervention cannot be ruled out," BofA adds.

• AUD/USD rallied to 0.6946 then fell towards 0.6930 into NY's open

• The pair traded close to flat and held a tight range in overnight trading

• Rallies in gold, silver, equities & the drop in USD/CNH lifted the pair

• US yield gains & USD bounce from its low weighed the pair

• AUD/USD hold below 21-DMA & 0.6980/90 zone are concerns for bulls

• Hold above the 10-DMA & rising RSIs give bulls some comfort though

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


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