23/10/2026
As the selloff in technology stocks intensifies, investors are flocking to traditional safe-haven assets including the yen, Japanese government bonds and US Treasuries. The yen extended its rally and climbed to its highest level in more than a month.
After weeks of tight range-bound trading, USD/JPY broke through resistance in the past 24 hours. The currency pair is now trading at its highest level since the Bank of Japan’s rate hike on September 18. During Friday’s Tokyo session, the yen strengthened by as much as 0.4% to 156.08 per US dollar, following a 0.9% gain on Thursday.
Asian equities tracked Wall Street lower, with investors continuing to offload tech stocks. Japan’s 10-year government bond prices surged, pushing yields down 10 basis points, while US Treasuries retained most of Thursday’s gains.
In recent years, the yen has struggled to sustain rallies from its traditional safe-haven status. During periods of market stress, wide interest-rate differentials and large repatriation flows from Japan’s overseas investments have often offset demand for the yen. Reports that BOJ officials favour keeping interest rates unchanged at this month’s meeting have also dampened expectations for near-term monetary tightening.
The yen also strengthened against other traditional safe-haven currencies, rising 0.3% versus the Swiss franc. It gained 0.3% against the euro as the single currency faced pressure from France’s fiscal woes and elevated energy prices.
Option traders are growing more bullish on the yen, reflected in the one-month USD/JPY risk reversal gauge. This shift shows investors are increasingly betting on near-term yen appreciation. Still, strategists debate whether the yen’s recent strength is mainly driven by risk aversion or domestic capital flows.
The rally comes ahead of policy decisions from the Bank of Japan and the US Federal Reserve next week, which will present another major test for the yen.
Some analysts warn, however, that the latest move may not mark the start of a sustained yen appreciation trend.
[Disclaimer] Forex trading involves risk; please invest with caution. This content is for informational purposes and objective analysis only, and does not constitute any investment advice, basis for buying/selling, or guarantee of returns. Investors should make independent decisions based on their own financial situation and risk tolerance, and bear their own investment risks.
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