The US dollar appears to have finally cracked, which would be good for the euro and the yen, along with gold, bitcoin, silver, copper and bonds. x.com 

The euro should grind higher against the dollar through 2026 as a more dovish Fed weighs on the dollar over the medium term, even though safe-haven flows support the dollar near term. EUR/USD stands at 1.1720, with the dollar index flat at 98.50. x.com 

France cannot print its own currency, so a debt crisis there could force an ECB rescue that erodes the euro's purchasing power soon. If Paris cracks, Italy follows. France's 10-year spread over Bunds is 174bp versus Greece's 109bp despite its A+ rating, though 2011 Greece was much worse. Default risk is low; the ECB backstop is priced in, but intervention is uncertain and its TPI has conditions France may resist. x.com  x.com  x.com  x.com  x.com  x.com 

The US needs a weaker yen, so Treasury Secretary Bessent's visible note to "Buy Japanese Yen (JPY) $5-10 bil," chickenfeed in any case, looks like a psyop and misdirect, calling for the opposite positioning; the buying was a chunk of carry trade to close. Per @TreasuryBonds1, Japan reportedly spent about $53 billion buying yen in a single day, its largest intervention ever, and Bessent called the yen very undervalued. x.com  x.com 

Japan's yen interventions only buy time, so the yen is likely to keep weakening until the Bank of Japan actually moves. Reserves only help while rates stay pinned, and each round costs reserves Japan can't replace while buying less time, making intervention a speed bump for the carry trade. Japan did not save USD/JPY 160 but rented time at it; once 162 prints, the intervention narrative dies. x.com  x.com  x.com  x.com 

Rising French sovereign yields signal the disintegration of France and the EU/euro. France's 10-year yield is now above 5%, with an 8-9% target; EUR/USD's 1.12 level still acts as support, though it shows a huge negative divergence. x.com 

The US dollar is unlikely to break out in the short term without a catalyst. An in-line PCE print pulled down 2-year and 10-year Treasury yields, the dollar index sits at major resistance at its May 2025 high, USD/JPY at 162 is a critical level for the Bank of Japan to defend, and currencies move slower than bonds. A reopened Strait of Hormuz would also help Europe and the euro recover, adding pressure; that favors short-term longs in gold and emerging markets. x.com  x.com 

Currency interventions are only a band-aid for the Japanese yen's decline. Treasury Secretary Bessent and the Bank of Japan spent $90B to halt the slide when USDJPY hit 164, and the move has already recovered nearly half. x.com 

France's fiscal bind and widening French-German bond spread raise contagion risk across Europe and threaten further euro weakness against the dollar. There is no easy economic way out for France, a problem that may apply to many EU countries. The 10-year spread is nearing the 190-basis-point level seen during the November 2011 eurozone crisis; the euro should continue to weaken against the dollar. x.com  x.com 

The yen is strengthening sharply toward ¥153-154 as the Bank of Japan hikes rates and intervenes, starting to unwind the global carry trade funded by cheap yen. That is not a normal FX move but a systemic margin call on every leveraged position funded in yen, with the BOJ now playing its own game rather than following the Fed. x.com