[MARKET ANALYSIS] USD/JPY slumps on double intervention threat

DXY: -0.4%

• Dollar is pressured as it gives up ground to the yen amid a double intervention threat from Japan and the US, while the greenback is also not helped by US President Trump's threat to impose 100% tariffs on Canada if it strikes a deal with China, and with the Democrats threatening a partial government shutdown over DHS funding following a fatal shooting in Minneapolis by a Border Patrol agent.

EUR/USD: +0.4%

• Benefitted from the softer buck but with further gains in the single currency capped by resistance just shy of the 1.1900 handle, while there were also recent comments from the Polish Finance Minister, who said they are in no rush to join the euro zone and that the case for adopting the euro had weakened as Poland has outpaced most euro zone economies.

GBP/USD: +0.4%

• Edged higher and gained a firmer footing at the 1.3600 handle, but with little major UK-specific catalysts, although PM Starmer and Chancellor Reeves are set to visit China this week as the UK seeks to bolster economic ties with China amid transatlantic tensions.

USD/JPY: -1.1%

• Slumped to beneath the 154.00 handle with the Japanese currency bolstered by a double intervention threat after Japanese PM Takaichi warned that the government is ready to take action against speculative moves amid a weakening currency and surge in bond yields, while it was reported on Friday that the New York Fed had conducted rate checks on USD/JPY.

Antipodeans: AUD/USD +0.5% / NZD/USD +0.4%

• Took advantage of the softer greenback and rising metal prices, although the advances are limited given the mixed risk appetite and quiet calendar, and with participants in Australia absent due to the Australia Day market closure.

The USD/JPY pair is facing significant pressure following a "double intervention threat" from Japan, indicating that the Japanese government is prepared to act against any speculative movements that could undermine the yen. This unstable situation, coupled with tensions over tariffs and a potential government shutdown in the U.S., suggests heightened volatility in the market, particularly for currency traders focused on the yen and the dollar.