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Yen Recovery Loses Steam Into London Morning


USD/JPY is finding a base after a renewed sell-off which began after the Tokyo fix.

  • Some have linked yen gains to geopolitical jitters, with U.S. House Speaker Pelosi & Beijing officials trading comments over Taiwan amid already heightened tensions.
  • Pelosi vowed that the U.S. "will not abandon our commitment to Taiwan," while China's Taiwan Affairs Office warned that President Tsai is pushing the island to a "disastrous abyss."
  • The rate has now ticked away from session lows (Y132.29), even as U.S. Tsy yields have stabilised at depressed levels.
  • USD/JPY risk reversal crept higher over the Tokyo session, with 1-year tenor showing at the highest levels since Jun 15.
  • Spot USD/JPY last operates at Y132.89, down 27 pips on the day. The rate is trapped between support-turned-resistance from the 50-DMA (Y134.58) and the 100-DMA (Y130.41) that limited losses on Tuesday.

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