JPY: USDJPY Extends Pullback as Top Currency Official Weighs In

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• Approaching the busy central bank slate and US data calendar this week, the dollar is starting the week on the back foot once again. Moves for the dollar index have been relatively contained, with the DXY just 0.1% lower on the session, although we remain within 20 pips of last week’s pullback lows. The softer dollar backdrop has allowed the likes of gold and silver to extend higher, rising 1% and 3% respectively, while the Japanese Yen outperforms across the G10.
• USDJPY has been pressured by lower core yields on Monday, with the pair largely shrugging off the firmer tone for risk. USDJPY has exhibited a 105-pip range, with the latest dip below 155 now probing last week’s lows. Below here, the December 05 low at 154.35 and the 50-day EMA at 153.95 represent an important support area as we navigate both the US data releases and BOJ decision.
• At the other end of the G10 leaderboard, NZD has notably declined amid comments from the newly appointed RBNZ Governor. Breman said the forward path for the OCR published in the November policy statement “indicates a slight probability of another rate cut in the near term”, pushing back against any expectations for a hike in 2026. NZDUSD is 0.35% lower on the session and back below 0.58, while AUDNZD briefly rose to a recovery high of 1.1520. 
• Elsewhere, USDKRW has extended session losses to nearly 1% after South Korea’s National Pension Service said it will conduct its strategic FX hedging in a “flexible” manner. USDKRW gathered downside momentum through the overnight lows at 1470 and notably, we are now below 20-day EMA support – a close below this average would be the first since September.

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