DBG Markets: Market Report for Nov 05, 2025

Market Turmoil Deepens: Tech Rout and Record U.S. Shutdown Fuel Yen Strength

Global market sentiment deteriorated sharply on Tuesday, triggering a broad sell-off across risk assets. U.S. equities suffered a deep correction, with all three major indices closing lower — the Nasdaq leading losses with a 2.04% decline. The selloff quickly rippled through global markets, sending Asian and European equities broadly lower.

In the FX market, safe-haven demand drove the U.S. dollar index higher, breaking above the key 100 mark to reach a six-month high. However, the Japanese yen emerged as the strongest performer among major currencies, reflecting a renewed preference for safety amid growing uncertainty.

Macro Headwinds: Record Shutdown, Tech Rout & Cautious Policy Outlook

The U.S. federal government shutdown has officially entered its 35th day — surpassing the previous record to become the longest in U.S. history. The Senate once again rejected a temporary funding bill, signaling that the political impasse in Washington is far from over.

This prolonged shutdown has triggered a series of ripple effects across global risk sentiment:

· Record Duration: Now in its 35th day, the shutdown marks the longest government closure in history, heightening concerns over U.S. political dysfunction.

· Data Blackout & Fed Outlook: The continued suspension of government operations has resulted in a “data blackout,” complicating the Federal Reserves policy assessment and reinforcing a cautious stance — adding further headwinds to market sentiment.

· Tech Stock Selloff: U.S. tech giants suffered a deep correction overnight, with NVIDIAs market value evaporating by nearly USD 200 billion. Fears over inflated AI valuations are resurfacing, while reports that “Big Short” investor Michael Burry has shorted NVIDIA further fueled market anxiety.

Japanese Yen: Staged for Reversal as Carry Trade Unwinds？

In the currency market, the Japanese yen‘s sharp appreciation has sparked notable volatility across major yen pairs, emerging as one of the key focal points in recent trading. The unwinding of carry trades — previously fueled by Japan’s ultra-low interest rates — has accelerated amid deteriorating global risk sentiment, prompting traders to unwind leveraged long positions in USD/JPY, GBP/JPY, and AUD/JPY.

The USD/JPY pair fell sharply toward the 153.00 level on Tuesday, even as the U.S. Dollar Index extended gains toward 100. This divergence highlights the yens renewed safe-haven appeal, driven more by global risk aversion than domestic fundamentals.

Meanwhile, AUD/JPY and GBP/JPY both registered steep declines, signaling broader deleveraging pressure and reinforcing the shift toward defensive positioning across global markets.

USDJPY, H4 Chart

For USD/JPY, the broader uptrend remains intact, supported by underlying dollar strength. However, the recent pullback suggests that yen momentum is beginning to pick up. While the dollars resilience may temporarily cushion the pair, further deterioration in global risk sentiment could strengthen the yen and potentially pause the uptrend.

Technically, if USD/JPY fails to sustain above the 153.00 level in the near term, the pair may enter a corrective phase, signaling a possible shift in short-term momentum.

Yen Cross Pairs in Focus

Opportunities may emerge in other yen cross pairs if the yen continues to strengthen as a safe-haven alternative — potentially driven by the ongoing unwinding of carry trades.

EURJPY, Daily Chart

EUR/JPY is now approaching a key resistance zone near 178.5 – 175.3. While there is no clear reversal signal yet, the recent price action hints at a possible double top or range consolidation, suggesting the market may be entering a phase of indecision.

In the near term, traders should watch for a potential breakout from this range — a downside break could signal the start of a bearish reversal in the pair.

AUDJPY, H4 Chart

Similarly, AUD/JPY has formed a comparable price structure, with the pair facing firm resistance around 101.00 – 100.00.

In the short term, the key zone lies between 100.00 – 99.50. If AUD/JPY fails to reclaim this area, downside momentum could likely extend further, reflecting continued deleveraging pressure in risk-sensitive assets.

Bottom Line: Cautious Sentiment Building Up

The global risk environment has turned increasingly fragile as political gridlock, data uncertainty, and profit-taking in overextended tech names weigh on sentiment.

The sharp rebound in the Japanese yen signals a broader shift toward defensive positioning, with carry trades unwinding amid rising volatility.

While the dollar remains fundamentally supported, persistent risk aversion could see safe-haven flows dominate in the near term — keeping equities under pressure and yen pairs vulnerable to further correction.

At this stage, the key catalyst lies in the U.S. government shutdown — a prolonged impasse could trigger a deeper market pullback, whereas a resolution may help restore investor confidence.