USD/JPY, AUD/USD React as China Launches ICBM Test in South Pacific

Geopolitical risk surged following reports that China's navy launched a nuclear-capable intercontinental ballistic missile toward international waters in the South Pacific. Diplomatic sources indicate that Chinese officials had briefed regional governments ahead of the test, and Japan has confirmed receiving prior notification of the launch. The development has significant implications for risk-sensitive forex pairs, with safe-haven currencies such as the Japanese yen and Swiss franc likely to attract demand amid elevated uncertainty. The Australian and New Zealand dollars, as regional currencies with strong trade ties to China, face potential downward pressure as markets assess the geopolitical fallout. The US dollar may see mixed flows, strengthening on safe-haven demand while traders weigh the broader implications for US-China relations and regional stability. Traders should monitor USD/JPY for potential yen strength toward key support levels, while AUD/USD and NZD/USD could face selling pressure. Volatility is expected to remain elevated across Asian session pairs as further details emerge and regional governments respond to the escalation.