[MARKET ANALYSIS] DXY is slightly lower whilst the JPY benefits somewhat from continued jawboning

• DXY is flat/incrementally lower and trades within a narrow 99.07-99.24 range; the trough for the day is a handful of ticks above its 50 DMA at 99.04. Further pressure in the index could see a test of its 200 DMA at 98.79.
• Really not much driving things for the index this morning, but overnight the USD was pressured on a WSJ report which highlighted that the US had halted China’s plans to expand in LatAm, and instead sees the Taiwan Strait belonging to China. The piece added that China could incentivise the US to move away from the Strait by billions of dollars in long-term Treasuries.
• Other G10s are mixed against the USD, with modest strength seen in Antipodeans (attributed to strength in the metals complex), whilst the GBP also gains. For Sterling, BoE's Taylor spoke earlier, where he reiterated that he expects monetary policy to normalise at neutral “sooner rather than later”, adding that the BoE can see inflation at target in mid-2027 vs 2027 previously. No move to these remarks.
• USD/JPY has chopped and changed this morning, but the JPY is net-firmer vs USD amidst continued jawboning from Japanese officials. A JPY piece can be found on the Newsquawk headline feed.

The DXY index is experiencing slight downward pressure, trading within a narrow range, which suggests a lack of significant drivers at the moment. This movement, along with reports about geopolitical tensions and jawboning from Japanese officials, is contributing to a relative strengthening of the JPY against the USD. Investors should watch for potential tests of key technical levels in the DXY, particularly with any shifts in sentiment around U.S.-China relations influencing market flows.