Forex News: Yen Slides Against Majors

Yen Slides Against Majors

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Tuesday.

The Bank of Japan's (BoJ) absence of openly hawkish commentary following last week's rate hike weakens the Japanese yen (JPY) versus the US dollar (USD).

In a 7-2 vote among policymakers, the BoJ agreed last week to boost the interest rate by 25 basis points (bps) to 1.25%, its highest level in 31 years. For the upcoming policy meeting at the end of October, swaps markets have priced in less than 20%, and for the policy decision in December, they have priced in a 90% chance of a rate increase.

In order to support the JPY, traders are nonetheless on high alert for currency intervention by Japanese authorities.

European markets traded higher after an AI-fueled rally on Wall Street overnight.

An index of U.S. semiconductor stocks jumped over 4 percent on Monday amid fresh optimism around global semiconductor demand after Meta's new AI agent app Muse rocketed to the top of the App Store in just ten days, reviving investor enthusiasm for the chip sector.

Traders also remain optimistic about diplomatic efforts to help de-escalate tensions in the Middle East ahead of a meeting between US President Donald Trump and Gulf-state leaders on the sidelines of the UN General Assembly later in the week.

Trump indicated potential for a meeting with Iranian President Masoud Pezeshkian in New York, adding that very big things could happen soon and he is in a "deciding mode" on military action.

U.S. President Donald Trump is set to address UN General Assembly later today and is expected to meet his Ukrainian counterpart Zelenskyy on Tuesday as diplomacy falters over wars in Ukraine and the Middle East.

As the Saudi-Houthi conflict rages on, Trump is expected to meet Gulf leaders impacted by the war with Iran to discuss the conflict and focus on plans for a postwar strategy.

Traders also await the outcome of the Trump-Xi meeting in Washington on Thursday, with trade, AI and geopolitics dominating the agenda.

In the European trading today the yen fell to 4-day lows of 180.83 against the euro and 210.90 against the pound, from early highs of 180.38 and 210.33, respectively. If the yen extends its downtrend, it is likely to find support around 186.00 against the euro and 217.00 against the pound.

Against the U.S. and the Canadian dollars, the yen dropped to 4-day lows of 157.76 and 112.47 from early highs of 157.27 and 112.10, respectively. The yen is likely to find support around 161.00 against the greenback and 115.00 against the loonie.

Against the Swiss franc, the yen dropped to more than a 2-week low of 192.28 from an early high of 191.63. The yen may test support around the 197.00 region.

The yen edged down to 112.22 against the Australian dollar, from an early high of 111.82. On the downside, 114.00 is seen as the next support level for the yen.

Looking ahead, U.S. ADP employment data, U.S. Redbook report, Eurozone consumer confidence for September and U.S. Richmond Fed manufacturing index for September are slated for release in the New York session.

Japanese stock markets are closed in observance of National Citizen's holiday.

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