JPY Outperforms as PBOC USD/CNY Fix Below 7.1 Weakens Dollar

The Japanese yen emerged as the standout performer during Asian trading hours, strengthening across the board while other currencies posted modest gains against a weakening US dollar. The catalyst for broad dollar weakness came from the People's Bank of China setting its USD/CNY reference rate below the psychologically important 7.1 level, signaling Beijing's tolerance for yuan appreciation. This development pressured the greenback against most major currencies, though EUR/USD remained anchored around 1.1600 due to significant option expiries totaling 4.13 billion euros at that strike price. The yen's outperformance suggests renewed safe-haven demand or potential positioning ahead of Bank of Japan policy expectations. Technical traders are monitoring whether the dollar's weakness will extend beyond Asian hours, with particular focus on how European and US sessions respond to the PBOC's signal and whether EUR/USD can break free from its options-related magnetic pull at 1.1600.