USD/JPY fluctuated in the morning session in Tokyo, reaching 157.01 yen in the afternoon. As the London session began, there was a surge in yen buying.
Over the weekend, U.S. President Biden announced his withdrawal from the next presidential election, naming Vice President Harris as his successor. Polls have shown that Trump vs. Harris is more favorable to Trump than Trump vs. Biden, possibly prompting yen buying among London participants anticipating a Trump rally. Local media in Georgia, where the Biden/Harris ticket previously won, conducted a poll following Biden's withdrawal, reporting that Trump leads Harris by 5 points, further fueling the Trump rally.
USD/JPY is expected to face heavy resistance moving forward. With intervention concerns making traders cautious about pushing the price higher, the afternoon movement in Tokyo has strengthened the downward bias. If the dollar selling from long-term investment funds rumored last week continues this week, another leg down is possible.
Cross yen pairs are also expected to decline, following USD/JPY. The movement is driven by yen appreciation rather than dollar depreciation. EUR/JPY could face further decline if it breaks below 170 yen, so caution is advised.
EUR/USD and other pairs show a lack of momentum. Yen-driven selling is capping the upside, but the range is limited. A calm movement is expected to continue.
The strategy of selling the U.S. dollar and buying the Japanese yen remains unchanged.
