Global Forex Impact: Yen's Plummet and Dollar's Surge

The yen hits a three-month low on political instability in Japan, while the U.S. dollar rises due to strong economic indicators and expectations of further political shifts. Analysts speculate on intervention thresholds for USD/JPY and the potential ramifications of U.S. tariffs on global currencies.

The yen experienced its most significant drop in three months, driven by political uncertainties in Japan after the ruling coalition lost its parliamentary majority. This development is expected to stall any interest rate hikes and could lead to another period of unstable leadership.

Meanwhile, the U.S. dollar is on track for its largest monthly surge since April 2022, buoyed by robust economic signals and speculative political changes. The dollar rose to 153.88 yen, marking the currency's weakest point since July.

Analysts anticipate potential interventions if the USD/JPY reaches 160, as Japan's financial institutions brace for ongoing volatility amid global currency fluctuations. Economic data from the U.S. and Europe, as well as reactions to trade tariffs, will significantly impact forex markets in the coming weeks.

(With inputs from agencies.)