The Japanese Yen (JPY) is facing heavy selling pressure, while Gold has climbed to an all-time high over $3,900. This week, we see important European economic data, including Sentix Investor Confidence for September and Retail Sales for August. We will also keep an eye on comments from central bank policymakers. Last week, the Yen performed the worst against the Australian Dollar. In the USD/JPY market, the pair began with a bullish gap, following the victory of fiscal dove Sanae Takaichi in Japan’s ruling party. Takaichi opposes further monetary tightening by the Bank of Japan (BoJ) and may allow a 25 basis-point interest rate hike by next January.

US Dollar and Gold Movement

The US government remains shut down, with no resolution in sight. Despite this, the US Dollar Index has rebounded, staying above 98.00 during the European session. Gold has strong demand at the start of the week, trading above $3,900 amid rising uncertainties about the US economy. EUR/USD has dipped close to 1.1700 as ECB President Christine Lagarde is set to speak to the European Parliament. At the same time, GBP/USD is struggling around 1.3450, with Bank of England Governor Andrew Bailey attending the Global Investment Summit 2025 in Scotland. Takaichi’s election indicates a shift toward a more dovish Bank of Japan, putting considerable pressure on the Yen. We’ve seen USD/JPY break the key 150 mark, a psychological level not maintained since late 2022’s policy interventions. Japan’s recent core inflation report for August 2025 shows inflation at 1.9%, giving Takaichi a solid argument against further monetary tightening, making short-yen positions appealing. Despite the ongoing US government shutdown, the Dollar is proving resilient, but caution is advised. We remember the 35-day shutdown from winter 2018-2019, which eventually hurt growth. This current deadlock could have a similar impact. With last week’s jobless claims rising to 215,000, derivative traders should think about hedging aggressive long-dollar positions against unexpected changes or worse economic results.

Gold as a Safe Haven

Gold breaking $3,900 is a response to US uncertainties and has become the market’s main safe haven. This rise is backed by solid fundamental demand, with central banks purchasing over 240 tonnes in the third quarter of 2025. Traders should see any pullback as a potential buying opportunity, as the overall trend looks strong. Given these trends, a simple derivative strategy is to bet against the Yen using call options on currency pairs like USD/JPY or EUR/JPY. This approach allows for exposure to Yen weakness with a clear limit on potential losses. Another attractive trade is considering Gold priced in Yen (XAU/JPY), which could gain from both the flight to safety and the softening of Japanese monetary policy. Create your live VT Markets account and start trading now.

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