USD/JPY Under Pressure as Japan Confirms FX Intervention; Geopolitics Weigh

USD/JPY faces heightened volatility amid confirmation that Japanese authorities intervened repeatedly in forex markets during the May holiday period, signaling Tokyo's commitment to defending the yen against excessive weakness. The PBOC set the USD/CNY reference rate at 6.8502, providing a stable anchor for Asian FX markets amid broader geopolitical uncertainty. Risk sentiment deteriorated as the US and Iran exchanged military fire, testing the fragile ceasefire, while the UAE reported responding to a renewed missile threat. Adding to the complex macro backdrop, President Trump issued an ultimatum giving the EU until July 4 to implement the Turnberry trade deal or face tariff escalation, injecting fresh uncertainty into EUR/USD dynamics. Goldman Sachs assessed that near-term tariff ruling impacts remain limited pending an appeal. Japan's services PMI fell to an 11-month low in April, suggesting softening domestic demand that could complicate the Bank of Japan's policy normalization timeline. Traders should monitor safe-haven flows into JPY and CHF, as escalating Middle East tensions and transatlantic trade friction may sustain elevated volatility across major pairs in the near term.