Benefiting from the strong performance of the US economy and the large yield differential between the US and Japan, the US dollar has continued to strengthen against the Japanese yen; at the same time, impacted by the French fiscal crisis, the yen has risen steadily against the euro. With a clear divergence among major global currencies, the price action of cross-currency pairs has significantly deviated from the dollar's unilateral trend, exhibiting independent price movements. This brings both more trading opportunities and risks to cross-currency trading. The Japanese yen is showing a divergent trend: weakening against the dollar and strengthening against the euro. The yen has retreated somewhat against the dollar, but continues to strengthen against the euro. The US has only played a nominal role in foreign exchange intervention. Driven by strong economic fundamentals, attractive domestic assets, and the Federal Reserve's continued interest rate hike cycle, the dollar continues to attract market funds. The minutes of the September Federal Open Market Committee (FOMC) meeting mentioned that raising the federal funds rate again at the end of this year would be a reasonable policy option. Futures market data shows a 19% probability of a Fed rate hike in October and a high 86% probability in December. Market participants are closely monitoring key US inflation and employment data; every better-than-expected economic indicator will further increase market pricing in a tighter monetary policy from the Fed. In contrast, the market expects only a 5% probability of a rate hike in October and a 70% probability in December for the Bank of Japan. The market generally expects both central banks to postpone rate hikes until the end of the year, which will continue to maintain the yield gap between US and Japanese Treasury bonds, supporting further appreciation of the dollar against the yen. The core driver of carry trades lies in the yield gap between bonds issued by different countries. As long as this gap remains high, funds will continue to flow to higher-yielding assets. This is especially true considering the limited involvement of the United States in joint currency intervention. The Federal Reserve has explicitly stated that it did not use its own funds to buy yen, but merely acted as an agent for the US Treasury. Previously, US Treasury Secretary Scott Bessant also stated that the Treasury only nominally participated in foreign exchange market intervention. The US-Japan joint intervention was more bark than bite . Washington and Tokyo seem to be making a mountain out of a molehill, using the pretext of joint intervention to deter speculative funds in the market. However, in reality, the main pressure of intervention fell entirely on Japan's shoulders; in the month before August 26, Japan invested approximately $97.5 billion to sell dollars and buy yen, setting a new record for intervention. If this is indeed the case, it is entirely reasonable for hedge funds to resume their net short positions in yen after a two-week hiatus. The divergence in economic growth prospects between the US and Japan, and the faster rise in US bond yields, will both drive the dollar to continue to strengthen. However, it's important to note that large-scale intervention can only cause short-term fluctuations in exchange rates and is unlikely to completely reverse the medium- to long-term trend driven by economic fundamentals. The effects of intervention are often gradually absorbed by the market over time. High oil prices continue to suppress the yen's fundamentals . The persistent failure of Brent crude oil prices to fall below $100 per barrel is also putting downward pressure on the yen. An industry survey indicates that volatility in the oil market is the number one source of risk for Japanese companies, with 37% of surveyed experts holding this view; another 21% of experts believe that exchange rate volatility is the main threat, while 19% point to the Bank of Japan raising interest rates. Japan is highly dependent on imported energy, and high oil prices not only push up imported inflation but also worsen the country's trade balance, continuously suppressing the yen's performance from a fundamental perspective. A shift in carry trade logic puts pressure on the euro and drags down cross-currency pairs . The yen's support stems from a change in investors' choice of funding currencies for carry trades, with the euro increasingly assuming this role. The French fiscal crisis has triggered continuous capital outflows, severely impacting the euro, with the euro-yen exchange rate plummeting to its lowest level since November of last year. French politicians' repeated calls for the European Central Bank to cut interest rates have severely damaged market confidence in the euro, a scenario strikingly similar to Trump's public pressure on Powell years ago. The Eurozone is a unified monetary system but with decentralized fiscal policies. With France, a core member, experiencing fiscal problems, the market fears the risk will spread to other Eurozone countries, further amplifying selling pressure on the euro.