Financial markets are shifting their focus to France.
In overseas markets, the yield spread between French 10-year government bonds and benchmark German 10-year government bonds has exceeded 1.3%, bringing conditions close to a “French version” of the “Truss shock.”
In response to the situation with French bonds, the Euro-Swiss and other euro-cross pairs are seeing movement.
The Euro-Swiss pair plummeted amid the turmoil in the French bond market, falling by as much as 150 points in a single day.

During today’s Asian trading session, the euro-dollar pair fell to 1.1161.
It appears that the turmoil in the French bond market and the large-scale demonstrations in France over the weekend have had a direct impact.

The Euro/Swiss Franc market is currently long-biased.
Since Switzerland continues to maintain a zero interest rate, it appears to be a good carry trade target.
However, Switzerland’s solid fundamentals ensure that capital inflows into the country will not stop, even with a zero percent interest rate.

Another market factor is U.S. Treasuries, which have rebounded to 5.31%.
Following last week’s weak jobs report, yields temporarily dropped to 5.16% before rising to around 5.30% toward the close; however, they have now reached a new high.

The U.S. Treasury market appears to be entering a downtrend (while yields are in an uptrend).
Whenever yields dip slightly, profit-taking (positions betting on rising yields) immediately kicks in.
Long-term U.S. interest rates look set to rise further, and the euro/dollar pair tends to fall as U.S. rates rise.

The dollar/yen pair is likely to rise, but the 200-day moving average is now at 158.45 yen.
If it clearly breaks above this level, the trend might change, but persistent selling pressure has caused the market to fall into a stalemate.
Intervention may occur at some point in the USD/JPY pair, and verbal intervention from Mr. Katayama also seems likely.

Prime Minister Takaichi stated, “In general, the undervaluation of the yen is a problem,” but there has been no change in her other remarks.
A consumption tax cut on food items will be implemented, but the source of funding remained undecided until the very end.
Even if she says, “I am not a reflationist,” if she acts like a reflationist, then she is a reflationist.

Therefore, even if the situation in Europe does not worsen further this week, it appears that the euro-Swiss franc pair could fall even further.
Consequently, I expect the euro-yen pair to follow suit and enter a downtrend.