Forex Today: Japanese Yen slides, Gold climbs above $3,900

Here is what you need to know on Monday, October 6:

The Japanese Yen (JPY) starts the week under strong selling pressure and Gold trades at a new record high above $3,900. The European economic calendar will feature Sentix Investor Confidence data for September and Retail Sales figures for August. Later in the day, comments from policymakers of major central banks will be watched closely by investors.

USD/JPY opened with a big bullish gap as markets reacted to Sanae Takaichi's, who is known to be a fiscal dove that could oppose further monetary tightening by the Bank of Japan (BoJ), win in the leadership race of Japan's ruling Liberal Democratic Party (LDP). Takaichi would become the first female Prime Minister of Japan and is expected to oppose any further monetary tightening by the Bank of Japan (BoJ). Reuters reported that Takuji Aida, one of Takaichi's closest advisers on economic policy, said that Takaichi could likely tolerate another 25 basis-points interest rate hike by January next year if the economy is in firm shape. At the time of press, USD/JPY was trading at its highest level since early August above 150.00, rising more than 1.5% on the day. Reflecting the broad-based JPY weakness, EUR/JPY was last seen rising 1.3% at 175.45, while GBP/JPY was up 1.45% at 201.67.

In the meantime, the US government remains shut and there are no developments that suggests that the Senate is in a hurry to break the deadlock. Over the weekend, White House National Economic Council Director, Kevin Hassett, said that if President Donald Trump decided that negotiations are "absolutely going nowhere," they will start laying people off. Nevertheless, the US Dollar (USD) Index rebounds on Monday and clings to gains above 98.00 in the European session.

Gold gathers bullish momentum at the beginning of the week and trades at a new record-high above $3,900, as it continues to attract buyers amid the uncertainty surrounding the US economic outlook. Israel and Hamas are expected to begin direct talks in Egypt on Monday to find a middle ground to implement Trump's proposed peace plan.

EUR/USD edges lower in the European morning on Monday and trades near 1.1700. European Central Bank (ECB) President Christine Lagarde will deliver a statement before the Committee on Economic and Monetary Affairs of the European Parliament later in the day.

After ending the previous week in positive territory, GBP/USD struggles to hold its ground and retreats to the 1.3450 area on Monday. Bank of England (BoE) Governor Andrew Bailey will speak at Scotland's Global Investment Summit 2025 in Edinburgh, Scotland.