USD/JPY, EUR/USD volatile as global bond rout deepens on oil-driven yield surge

Global sovereign debt markets extended their sell-off on Wednesday as surging crude prices, driven by US-Iran hostilities, forced investors to reprice a 'higher-for-longer' interest rate outlook. Rising long-end yields across the US, Europe and Japan are reshaping FX correlations: wider US-Japan yield differentials keep USD/JPY firm near the 160.00 handle, while the pace of the move raises the risk of Japanese verbal or actual intervention. EUR/USD remains capped as the energy shock hits the euro area's import-heavy growth profile, with resistance around 1.1500 and support near 1.1350. Higher yields and softer equities typically favour the dollar and franc against high-beta currencies, leaving AUD/USD and NZD/USD exposed, while CAD outperforms on the oil bid. Traders should note that bond-driven dollar strength can reverse quickly if yield increases become disorderly and equity drawdowns force safe-haven Treasury buying. Watch auction results, term-premium commentary from central banks, and any inflation expectation repricing, as these will determine whether the current dollar bid extends or stalls into month-end flows.