JPY: USD/JPY Sub 158.00, Outperforms G10, RRs Sharply Lower

The EUR/USD range overnight was 1.1500-1.1539, Asia is currently trading around 1.1510. The pair stalled and topped out around the 1.1550 area at the first time of asking. The pairs move higher post the FOMC together with the forced US Dollar selling brought about by the injection of around $100 billion through Yen intervention saw a market that was ramping up its short EUR exposure wrong-footed(Fig.1). I remain skewed in favour of fading rallies with this pivotal weekly 1.1500-1.1550 area coming back into play(Fig.2). I will be watching closely over the short-term to see if this move lower in the USD is anything more than a knee-jerk reaction to the intervention in the Yen and if it can build on its initial reaction. For the short-term it seems we should be prepared for some ranges as those extra USD’s work themselves through the system.           

• Robin Brooks on X: “The end of the Euro isn't some fever dream. The rise of the AfD is the German equivalent of the MAGA rise in the US. When countries start to struggle - and Germany is struggling - generosity for other countries ends.”  https://x.com/robin_j_brooks/status/2084236453903552930?s=20
• CFTC Data up to 28/07/26 shows the Leveraged community continuing to add to their core shorts, -92 930(Last –80 570). Asset managers continue to reduce their core longs, +235 898(Last +252 952). 
• Options : Closest significant option expiries for NY cut, based on DTCC data: 1.1450(EU2.06b), 1.1500(EU1.22b), 1.1550(EU907m). Upcoming Close Strikes :  1.1350(EU2.14b Aug 6), 1.1500(EU1.42b Aug 5). - BBG
• The EUR/USD Average True Range for the last 10 Trading days: 58 Points

Fig 1 : EUR CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

Fig 2 : EUR/USD Spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-year JGBs. The MoF last sold 10-year debt on 2 July 2026. This month's auction offers an outright yield ~10bps above the level of last month's auction and ~10bps below its cycle high.

• The 2s/10s yield curve is ~10bps flatter last month's auction and around 20bps below its cycle high. Moreover, the 7s/10s curve, a measure of value between JB1 futures and the 10-year, is slightly flatter than last month and sits near the top of the past year's range.
• Sentiment toward longer-dated bonds remains pressured by the effects of the Middle East conflict.
• Against this backdrop, it remains to be seen whether the current 10-year yield level will be sufficient to improve demand in today's auction.
• Results are due at 0435 BST / 1235 JT.

The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-year JGBs. The MoF last sold 10-year debt on 2 July 2026. The auction drew cover of 3.1302x at an average yield of 2.729%, an average price of 99.77, a high yield of 2.755%, a low price of 99.57, with 91.4461% of bids allotted at the high yield.

• Last month, the 10-year auction delivered weak results, with the low price beating expectations at 99.77, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.1302x from 3.5200x and the tail lengthened to 0.20 from 0.05.
• That performance came with an outright yield that was 5-10bps above the level of prior month's auction level but ~10bps below its cycle high.
• The 2s/10s yield curve was ~10bps steeper than the prior month's auction level and was hovering just below its cycle high.
• Results are due at 0435 BST / 1235 JT.