In Tokyo trading on the 26th, yen buying dominated USD/JPY in the morning, sending it down from the 159-yen range to 158.88. The pair then struggled to recover, trading around 159.00 through the afternoon.
In Tokyo trading on the 26th, yen buying dominated USD/JPY during the morning, with the pair falling from the 159.20 range to 158.88. Although it subsequently found support, its recovery was limited, and trading around 159.00 continued through the afternoon.
The morning's yen strength was triggered by factors including lower oil prices. Reports of an interim agreement between Iran and Oman prompted a sharp decline in NYMEX crude oil futures, raising expectations of an improvement in Japan's terms of trade and prompting yen buying. Reduced concerns about an expansion of gasoline subsidies also eased worries about the fiscal deficit, providing another catalyst for yen buying.
Excluding USD/JPY, the dollar was broadly stronger. EUR/USD fell from the 1.1670 range in the morning to 1.1661 in the afternoon. US long-term Treasury yields declined, with the 10-year yield falling from the 4.71 range to the 4.61 range before rebounding to the 4.64 range, supporting the dollar.
Cross-yen pairs fell sharply amid the morning's yen buying and selling of the euro, pound and other currencies against the dollar. EUR/JPY declined from the 185.90 range in the morning to 185.35 shortly after noon, with its subsequent recovery limited to the 185.50 range. GBP/JPY fell from the 217.30 range in the morning to 216.70, then remained around 216.80, as yen strength and dollar strength continued.