Published: August 31, 2026 | Category: Forex News, Macro Analysis
The Euro (EUR) is showing mixed reactions against the Japanese Yen (JPY) following US Treasury Secretary Scott Bessent's latest interview with CNBC, where he made bold predictions on oil prices and the Yen's trajectory. EUR/JPY is trading near 185.20, down around 0.1% during Monday's European session, as the Japanese Yen outperforms major currencies amid growing expectations that the Bank of Japan (BoJ) will raise interest rates in the September policy meeting. Bessent's comments have added fresh momentum to Yen strength, with markets now pricing in a higher probability of coordinated intervention between the US and Japan. Meanwhile, oil prices have already started responding to his remarks, with Brent crude slipping below $80 per barrel as traders bet on a potential US-Iran deal that could ease supply constraints.
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Bessent's Full Interview: Key Takeaways for Forex Traders
"Oil prices will come down," Bessent stated firmly, adding that US President Donald Trump has been signaling that Iran is not ready for a deal—yet. However, Bessent expressed optimism that "Operation Outcast will make Iran want to make a deal," suggesting that diplomatic pressure could eventually bring Tehran to the negotiating table. The Treasury Secretary noted that "we have more in common with China on Iran than we disagree on," hinting at a potential multilateral approach that could stabilize energy markets .
On the currency front, Bessent delivered a clear message to Yen traders: "My belief is that Japanese government and BOJ will do things that will lead to a stronger Yen." This comes as USD/JPY continues to hover near elevated levels, with the pair recently testing the 160 mark before a joint US-Japan intervention pushed it back toward the high 150s .
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Yen Strength: What's Driving the Rally?
The Japanese Yen has been on a recovery path since early August, supported by multiple factors:
Catalyst Impact on JPY
BOJ Rate Hike Expectations 25bps hike priced in for September
US-Japan Coordinated Intervention First joint intervention in 15 years
Bessent's Public Support Signal of US backing for Yen strength
Carry Trade Unwinding Reduced appetite for borrowing JPY
Bessent's comments reinforce the view that the US Treasury is aligned with Japan's efforts to stabilize the Yen. The August intervention, backed by Fed dollar-for-collateral swaps and diplomatic pressure on the BOJ to accelerate its tightening cycle, successfully drove USD/JPY from 160 towards the high 150s . With Bessent now publicly voicing support for a stronger Yen, traders are bracing for further upside in the Japanese currency.
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Oil Prices: Why Bessent Expects a Decline
Bessent's oil price forecast is closely tied to geopolitical developments with Iran. A potential truce between the US and Iran could lead to the reopening of the Strait of Hormuz, allowing maritime traffic to resume and easing supply bottlenecks . Oil prices have already responded, with Brent crude trading below $80 per barrel .
Impact on Forex Markets
· Canadian Dollar (CAD): As a major oil exporter, CAD could face headwinds from lower crude prices
· Norwegian Krone (NOK): Similarly vulnerable to falling oil revenues
· US Dollar (USD): Lower oil prices could ease inflation pressures, potentially allowing the Fed to pivot sooner
· Emerging Market Currencies: Oil-importing nations like Turkey and India could benefit from cheaper energy
However, analysts caution that markets are not fully pricing in certainty. "If they were certain of this, the price of oil would already have fallen to $70 a barrel; instead, it stands at $80. This means they attribute a certain margin of uncertainty to Bessent's words," noted economist Riccardo Trezzi .
Market Reaction: EUR/JPY Under Pressure
The Euro is trading lower against the Yen as the combined weight of BOJ hawkishness and Bessent's comments weighs on the cross. EUR/JPY is currently around 185.20, with the pair testing key support levels.
Technical Outlook
· Support: 184.80, 184.00
· Resistance: 186.50, 187.20
· Trend: Bearish in the near term, with potential for further downside if BOJ delivers a hawkish surprise in September
What's Next? Key Events to Watch
Event Date Impact
German Inflation Data August 31 EUR volatility
US Non-Farm Payrolls September 6 USD direction
BOJ Policy Meeting September 20-21 Rate decision
Iran Nuclear Talks Ongoing Oil prices
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Bottom Line
Bessent's coordinated messaging on oil and the Yen signals a deliberate effort to influence market sentiment. For USD/JPY, the expectation of a stronger Yen—supported by potential BOJ rate hikes and US-backed intervention—points to potential downside risk for the pair . Meanwhile, falling oil prices could weigh on commodity currencies like CAD and NOK, while easing geopolitical tensions may support risk-on sentiment.
Traders should closely monitor developments regarding US-Iran negotiations and any further statements from the Treasury Department or the Bank of Japan. As Bessent himself emphasized during the interview, the Federal Reserve's policy decisions are not something he will speculate on, but the ongoing "detox" from forward guidance means every meeting should be considered "live" .
Disclaimer: Forex trading involves significant risk. This analysis is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult with a licensed financial advisor before making trading decisions.