Kickstart the North American FX session. The USDJPY is the big mover. The EUR and GBP are down modestly

The North American foreign exchange session began with broad U.S. Dollar weakness, highlighted by a sharp decline in USD/JPY. The currency pair dropped 1.15%, breaking key technical support near 155.15 and accelerating toward the 154.00 level. In contrast, downside moves against other major peers remained relatively muted, with EUR/USD dipping 0.10% and GBP/USD dropping 0.12% amid thin holiday trading conditions during the North American Labor Day market closures. The significant sell-off in USD/JPY is driven by rising expectations that the Bank of Japan will hike interest rates by 25 basis points next week, followed by another potential hike later this year. This policy shift has narrowed U.S.-Japan yield differentials, unwound popular yen-funded carry trades, and reinforced caution over previous Japanese intervention levels. Concurrently, weekend geopolitical escalations in the Middle East—including U.S.-Iran missile and tanker strikes—led to a sharp decline in shipping through the Strait of Hormuz. This added a geopolitical risk premium across energy markets, pushing WTI and Brent crude oil prices up by 1.0% and 1.25%, respectively.