With a series of reports indicating progress in peace talks between the U.S. and Iran, the foreign exchange market opened this week with profit-taking on the “safe-haven dollar” and dollar selling.
However, today is a bank holiday in the UK and Memorial Day in the U.S.

Since U.S. markets are closed for the holiday, liquidity will be low at the start of the week, leading to a quiet opening.
We are unlikely to see significant movements in overseas markets.

The fact that peace talks between the U.S. and Iran are making progress following the U.S.-China summit suggests that China is likely involved behind the scenes.
We have entered an era where the world is governed by the two superpowers, the U.S. and China.
Arms exports to Taiwan have been halted, and the sale of Tomahawk missiles to Japan has been delayed by two years.

Caught between the U.S. and China, the Japanese economy benefits in some ways but faces challenges in others.
In terms of foreign exchange, it has become very difficult to view the yen as a “safe-haven currency.”

The biggest point of caution this week is Thursday (May 28).
On this day, the “April PCE Deflator,” “Q1 GDP (revised),” and “April Durable Goods Orders” will all be released simultaneously, so the dollar exchange rate may experience sharp volatility immediately following the announcements.
Friday is the last business day of the month, and we must also be on guard for yen-driven volatility heading into the weekend.

We should brace ourselves for continued capital outflows and assume that the yen will remain weak.