🗞️ Will Yen Strength Continue? — This Week’s Key Focus
■ Yen Appreciation Accelerates — Political Stability and Short Covering Behind the Move
This week, yen strength has become increasingly pronounced.
In last weekend’s Lower House election, the ruling Liberal Democratic Party (LDP) secured a larger-than-expected landslide victory, reinforcing the foundation of the Takaichi administration. Among overseas investors, confidence in Japan’s political stability has improved.
As a result:
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Previous “Japan sell” positioning has retreated
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Japanese equities have continued to post record highs
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Foreign capital has been flowing into Japanese markets
This shift in perception is playing a meaningful role in the currency market.
■ FX Market: Yen Short Covering Underway
In FX, the dominant theme has been the unwinding of accumulated yen short positions.
Japan’s Vice Finance Minister for International Affairs, Masato Mimura, reiterated strong concern over excessive yen weakness, keeping intervention vigilance firmly in place.
📉 USD/JPY Price Action
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January 27 low: 152.10
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Today’s Tokyo session low: 152.27
Although price has stabilized somewhat, a key question for the week is whether overseas markets will push USD/JPY below 152.
■ Post-NFP Dollar: Lacking a Decisive Catalyst
Yesterday’s U.S. employment report delivered mixed signals:
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Nonfarm payrolls came in relatively strong
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However, downward annual revisions offset the headline strength
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Severe weather effects were also cited
As a result, the data failed to provide a clear one-way driver for the dollar.
Key Moves
EUR/USD
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Fell sharply from around 1.1900 to 1.1833
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Rebounds have been limited
USD/JPY
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Dropped from 154.65 to below 153
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Subsequent upside attempts remain capped
Currently, the market appears to be driven more by yen strength than by broad dollar weakness.
The Dollar Index lacks direction and continues to trade near the softer levels seen earlier this week.
🎯 Tonight’s NY Session
📊 Economic Data
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Initial Jobless Claims
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Existing Home Sales
However, the market’s true focus lies on tomorrow’s U.S. CPI report.
Today’s data are more likely to generate only temporary volatility.
🇬🇧 European Session Focus
At 16:00 JST, UK data are scheduled for release:
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Monthly GDP (December) — slowdown expected
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Industrial Production
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Trade Balance
With lingering uncertainty surrounding the Starmer administration, sterling may struggle to sustain gains.
🗣 Other Events
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Remarks from ECB and Bank of Canada officials
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U.S. 30-year Treasury auction
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Major earnings (Coinbase, Airbnb, etc.)
While there are numerous headlines, the FX market’s core focus remains clear.
🔎 This Week’s Central Theme
How far will the yen rally extend?
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Will USD/JPY break and hold below 152?
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Or will short covering run its course, triggering a rebound?
Intervention vigilance remains in the background, making both aggressive downside chasing and heavy dip-buying cautious trades.
This week marks a delicate juncture:
Will U.S. CPI return the dollar to center stage,
or will yen-led price action continue to dominate?
The market has entered a highly sensitive phase.
