📊 USD Weakness and JPY Strength Pause for Now, Market Enters a Consolidation Phase Ahead of Tomorrow’s FOMC
■ Overall Overview
This week,
- USD weakness
- JPY strength
accelerated sharply, but both are now showing signs of a temporary pause.
On the daily charts, most currency pairs are displaying short-term overextended conditions.
RSI (Relative Strength Index) readings are approaching or have already reached
- overbought
- oversold
zones in many markets.
With the US FOMC meeting tomorrow, a major risk event, the market is shifting into a phase dominated by position adjustments and profit-taking.
■ Nevertheless, USD-Negative Factors Remain Abundant
Even with the current consolidation, fundamental headwinds for the dollar remain strong.
- President Trump has hinted at tariffs against
- South Korea
- Canada
- Against Iran, the US has
- dispatched an aircraft carrier strike group to the Middle East
→ reigniting geopolitical risks
- dispatched an aircraft carrier strike group to the Middle East
- Within the US, additional negative factors include
- worsening immigration issues
- the impact of a severe cold wave
Structurally, this means:
“The selling pressure on the USD has not been resolved.”
■ JPY Market: Intervention Risk Is Capping Price Action
The recent yen strength was driven by
- speculation about exchange-rate checks
- fear of direct FX intervention
However, the current environment is a delicate balance:
- speculative yen selling is largely suppressed
- yet the atmosphere is not one of immediate intervention either
This creates an extremely nervous equilibrium.
If any of the following occur:
- around the FOMC
- election-related headlines
- another sharp surge in USD/JPY
then
concerns about action by the Japanese and US authorities
could quickly intensify again.
■ Option Market Shows Persistent Tension
USD/JPY one-week implied volatility:
- Current: around 11.6%
- Recent peak: around 14%
- Normal level: around 8%
This remains
“abnormally high,”
indicating that the market is still pricing in significant short-term risk.
■ Today’s Economic Indicators
【Europe & Emerging Markets】
- France: Consumer Confidence (Jan)
- Hong Kong: Trade Balance (Dec)
- Mexico: Trade Balance (Dec)
- Brazil: IPCA Inflation (Jan)
- Hungary: Central Bank Policy Rate (Jan)
【United States】
- S&P Case-Shiller Home Price Index (Nov)
- FHFA House Price Index (Nov)
- Richmond Fed Manufacturing Index (Jan)
- Conference Board Consumer Confidence (Jan)
■ Speeches & Events
- Nagel, President of the German Bundesbank
(Digital euro related conference) - US 5-year Treasury auction (USD 70 billion)
- Major US corporate earnings
→ Boeing, Texas Instruments, etc.
■ Early London Session FX Moves
The USD is slightly stronger.
- EUR/USD
→ down to 1.1861 - GBP/USD
→ down to 1.3670 - USD/JPY
→ up to 154.76
Both USD strength and JPY weakness are appearing simultaneously.
■ Conclusion
The market is fully in
“FOMC-waiting consolidation mode.”
- The broader trend still leans toward USD weakness and JPY strength
- In the short term, rebounds and position unwinding are likely
- An abnormal environment where intervention risk and FOMC risk coexist
Until tomorrow’s FOMC passes, this is not a market for choosing direction, but rather one dominated by
position adjustments and nervous, choppy price action.
