Just got some news: the U.S. reportedly sold euros and bought yen in the forex market, causing the dollar to weaken and the yen to strengthen. Next week, we’ll need to watch if USD/JPY continues to drop. If it does, it’s not great news for risk assets. A stronger yen increases the cost of Yen Carry Trades. Leveraged funds might start unwinding positions, selling U.S. stocks, cryptocurrencies, and other risk assets to buy back yen for debt repayment. This could tighten market liquidity and reduce risk appetite. Even though this has been mentioned many times before, and its impact has been diminishing since August 2024, it’s still something to keep an eye on.