Trending
usdjpy
Source: Newsmaker.id
The United States (US) dollar weakened against the Japanese yen in trading on Thursday (October 22, 2026), driven by rising demand for safe-haven currencies amid a global stock market sell-off and deteriorating sentiment toward the artificial intelligence (AI) sector. The Japanese yen climbed 0.8% to 156.86 per US dollar, reaching its strongest level since late September. The Japanese currency also gained 0.9% against the euro, making it one of the best-performing major currencies of the day. The dollar’s decline against the yen occurred as investors reduced their exposure to risky assets following disappointing earnings reports from technology and AI companies. Renewed geopolitical tensions in the Middle East—which pushed global oil prices higher—further dampened market sentiment, while a surge in US government bond prices pressured Treasury yields, eroding support for the greenback.
Pressure on the US dollar intensified as concerns regarding the sustainability of AI investments drove a decline in US government bond yields. Sim Moh Siong, a foreign exchange strategist at OCBC, noted that risks associated with the AI industry are heavily concentrated in the US; consequently, growing unease regarding this sector has weighed on both Treasury yields and the USD/JPY pair. Amid this shift in sentiment, the Swiss franc also strengthened by approximately 0.4% against the US dollar, while the euro faced downward pressure due to mounting concerns over French government debt and high energy costs. Alex Cohen, a strategist at Bank of America, observed that current foreign exchange market movements reflect a typical "risk-off" pattern, where the yen and Swiss franc gain support while the euro comes under pressure. This dynamic illustrates that demand for safe-haven assets does not always benefit the US dollar—particularly when the primary source of market anxiety stems from the economic growth outlook and the state of the technology sector within the United States itself.
Meanwhile, the derivatives market is beginning to show growing optimism regarding a strengthening yen in the short term, as reflected in shifts in one-month USD/JPY option contract positions. This change suggests that some investors are starting to factor in the possibility of further appreciation for the Japanese currency—though there remains debate over whether this strength is driven primarily by heightened risk aversion or by capital flows returning to Japan. Nevertheless, some analysts caution that the yen’s rally may not necessarily evolve into a sustained trend of appreciation. Hirofumi Suzuki, Chief Foreign Exchange Strategist at Sumitomo Mitsui Banking Corporation, notes that upcoming central bank meetings next week and the U.S. midterm elections in November could shift market direction once again. Investors are currently monitoring Treasury yields, developments in technology stocks, geopolitical tensions, and the monetary policy trajectories of both the Federal Reserve and the Bank of Japan to gauge the outlook for the U.S. dollar against the yen in the coming sessions.
Newsmaker Conclusion
The weakening of the U.S. dollar against the Japanese yen demonstrates that a global shift in sentiment toward "safe-haven" assets does not always benefit the greenback. When market concerns center on the U.S. artificial intelligence (AI) sector, a decline in Treasury yields can actually strengthen the yen and exert downward pressure on the USD/JPY pair.
In the short term, the yen could continue to strengthen if the sell-off in technology stocks deepens and U.S. bond yields continue to fall. However, the outlook for Federal Reserve interest rate policy remains a critical factor that could limit the dollar's decline.
Impact on the U.S. Dollar: If the USD/JPY pair consistently trades below 156.50, the downward pressure could extend toward the psychological level of 156.00. Conversely, should the dollar regain strength and the pair break above 157.50, a recovery toward 158.00 could become possible. These levels serve as technical reference points rather than definitive price targets. Market focus: Investors will be closely monitoring the Federal Reserve’s decision on October 27–28, movements in Treasury yields, and developments in the AI sector—all of which could determine whether the US dollar continues to weaken or regains momentum to strengthen. (arl)
Source: Newsmaker.id