USDJPY Declines Amid Currency Intervention; EURUSD and GBPUSD Stable

The USD is mostly higher against major currencies, with the exception of the JPY. The USDJPY pair has fallen further, dropping below the 200-day moving average for the first time since October 2025, following reported intervention by the Bank of Japan. Recent data indicates that Japan conducted approximately ¥5.3 trillion in currency intervention to support the yen, amid a liquidity shortfall of around ¥11.4 trillion, suggesting a large-scale operation. This intervention marks a rare coordinated effort between Japan's Ministry of Finance and the U.S. Treasury Department, the first joint yen-buying operation since 2011.

The USDJPY is down an additional 0.58%. The EURUSD remains near unchanged, while the GBPUSD is lower by 0.10% as the new trading day begins.

In Middle East developments, President Trump announced a shift from planned military action to diplomacy with Iran, stating that talks are expected to commence on Monday. However, Iran has denied any scheduled negotiations, leading to uncertainty about the potential for meaningful discussions.

The Strait of Hormuz remains a focal point, with ongoing discussions between Iran and Oman regarding shipping arrangements, but no finalized agreements have been reached. Shipping traffic in the region remains below normal, with isolated security incidents posing risks.

Israeli officials have indicated a readiness to act if Iran resumes its nuclear or missile programs, maintaining the option for military operations even if U.S.-Iran diplomacy progresses.

In response to these developments, oil prices have fallen sharply, with crude trading at $79.10, down $5.54 on the day, as traders reduce the likelihood of immediate military escalation and begin to factor in potential easing of shipping disruptions.

New York Fed President John Williams reiterated the Federal Reserve's commitment to maintaining interest rates to achieve the 2% inflation target, expressing confidence that inflation pressures will moderate over time. He acknowledged uncertainties stemming from the Middle East conflict but emphasized that the Fed is not bound to follow market expectations.

U.S. stock futures show mixed results, with the Dow gaining 456 points, the S&P up 25 points, and the Nasdaq down 26 points. In the U.S. debt market, yields have declined across various maturities, reflecting market reactions to the current economic outlook.