Yen Soars on Safe Haven Rally
USD Plunge Boost Yen
The Japanese Yen is roaring back today, on course for its biggest single-day rally in over a month, as USD weakness and risk aversion drag USDJPY lower. The greenback is falling harder today on the back of some weakness in big tech earnings yesterday which has revived the AI stock selling which gripped markets last week. Earnings misses from Tesla and Meta have spooked investors on the back of the AI funding fears which surfaced last week. Given the importance of AI spending in the current inflation and growth outlook for the US, the prospect of weaker AI investment is being see as a dovish signpost for the Fed with the bank less likely to hike into an AI stock rout. Indeed, if this narrative develops further and inflation expectations start to cool consequently, this could deepen the correction we’re seeing in USD.
AI Investment Fears
Given the implications for USD, the current wave of AI-linked risk aversion is driving demand into JPY as a preferred safe-haven. Where USD had been the bigger beneficiary during the US/Iran conflict so far, JPY now looks better positioned to benefit from this specific risk event. Looking ahead, traders will be monitoring moves in AI stocks and further incoming tech earnings with any continued weakness likely to drive USDJPY lower into the FOMC next week.
Technical Views
USDJPY
Price is now reversing heavily back under the 157.95 level, retesting the broken bear channel highs. Below here, 155.36 and the bull trend line from Sep 2025 lows is the next support zone to watch with bulls needing to defend that region to prevent a more seismic bearish shift in the outlook developing.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.