Forex alert: The Yen is back, marching to Its own beat

Forex markets

The yen is charging ahead, marching to the beat of its own drummer, while the rest of the G10 currency pack stumbles under the weight of dovish pivots. In a world where central banks are either hacking away at interest rates or clinging desperately to an easing bias, the yen is emerging as the clear outlier—the one currency with a legitimate path to appreciation. With the BoJ shifting cautiously toward more tightening and JGB yields rising, traders are finally waking up to decent re-rating.

I’ll be the first to admit—I should’ve seen this one coming sooner. The tail end of the New York session was flashing all the right signals, and yet I was sitting on my hands instead of jumping in. Hindsight, as always, is 20/20. But what’s crystal clear now is that this isn’t just another safe-haven play—this is a real divergence trade fueled by fundamentals, and traders are scrambling to get in before it runs away from them.

That said, for full transparency, I’m taking the other side of this move( long USDJPY)—averaging in on the break of 150.75 purely for a day trade so far. I typically fade Tokyo fixings, and while today’s setup is a bit sketchy in the short term, if Trump’s tariff hammer comes crashing down, the dollar will undoubtedly rally. For now, however, yen bulls are piling in, and it’s starting to look like a one-way street.

Maybe the real spark, in a delayed fashion, came from the RBNZ blindsiding the market, not with a surprise 50bps rate cut but signalling an even steeper easing cycle to revive New Zealand’s flailing economy. If that sentiment bleeds into the eurozone, we could be looking at a full-blown divergence play between the yen and euro, setting up another high-volatility showdown in FX markets.

Bottom line? The yen isn’t just a trade—it’s a statement. And right now, that statement is screaming divergence.

Asia wrap

Asian equities stumbled on Thursday on the continued knock-on effect after President Donald Trump reignited trade war fears with fresh tariff threats, putting risk appetite on ice. Stocks across the Asia-Pacific region slid, with mainland China and Hong Kong benchmarks opening in the red. US equity index futures also ticked lower, hinting that the S&P 500 could give back some of its recent gains when Wall Street wakes up.

Meanwhile, Treasuries held steady as the market debated whether the FOMC minutes leaned more hawkish or neutral—not that it really matters. Price action always tells the real story, and with bond yields lower post-FOMC minutes and steady in early trading in Asia, the market has already made its decision.

But the real elephant in the room? The ever-present drumbeat of a trade war escalation. With Trump ramping up tariff rhetoric yet again, safe-haven demand is creeping higher, keeping assets like gold firmly in focus. The question now is whether we are in a negotiation theatre or the start of something more sinister. Either way, markets are on edge.

If you're hunting for a silver lining in today’s market turmoil, look no further than oil prices—they continue to slide, offering some relief on the inflation front. The pullback is fueled by a growing oil glut in U.S. inventory tanks and rising expectations that Russian sanctions could be unwound as part of broader peace negotiations.

For now, crude is struggling to find a meaningful bid, as supply-side pressures outweigh geopolitical risk premiums. If the Russia-Ukraine peace process gains traction, the floodgates could open for Russian crude exports, potentially triggering a further leg down. But traders aren’t completely discounting the risk of sudden reversals—because when it comes to geopolitics, nothing is ever a straight line.