JPY and AUD face heavy selling as reserve managers shift allocations

Central bank reserve managers executed significant selling of JPY and AUD positions during Q1 2025, according to MUFG's analysis of COFER data. The Japanese yen depreciated approximately 2.5% against major currencies as reserve managers reduced exposure, while the Australian dollar faced similar pressure with a 2.1% decline in allocation weightings. Conversely, the Swiss franc emerged as the primary beneficiary, with holdings surging 3.2% as managers sought traditional safe-haven assets amid global uncertainty. This reallocation trend reflects growing concerns about Japan's monetary policy divergence and Australia's commodity-linked vulnerabilities. Technical indicators show USD/JPY approaching 148.00 resistance, while AUD/USD tests support at 0.6450. The shift in reserve management strategies suggests continued pressure on both currencies, particularly as global central banks reassess portfolio compositions in response to evolving geopolitical risks and monetary policy expectations.