Markets were very eager to pile into the de-escalation narrative, and even the faintest hint that the US Hormuz blockade might be nudging things back toward talks has been enough to put crude oil, and the dollar, under a fair bit of pressure, providing relief for risk assets. Trump's remark that Iran had reached out to restart negotiations only added fuel to the move, prompting another round of dollar selling.
USD/JPY fades from near 160.00 as improving sentiment softens the US Dollar
U.S. has started a naval blockade of Iran.
USD/JPY rose to 159.73 on Monday. The Japanese yen has fallen for a third consecutive day due to a fresh surge in oil prices following the failure of the United States and Iran to reach an agreement at talks in Islamabad.
Japanese Yen stays weak against USD; intervention fears keep USD/JPY below 160.00
USD/JPY Price Forecast: Strength beyond 160.00 awaited amid bullish technical setup
USD/JPY stayed in consolidations below 160.45 short term top last week and outlook is unchanged. Initial bias remains neutral first and further rise is expected with 157.49 cluster support (38.2% retracement of 152.25 to 160.45 at 157.31) intact.
USD/JPY is being driven by energy prices, not rates, with BoJ intervention risk the only meaningful counterweight as pressure builds on Japan's bond curve. The economic calendar is largely irrelevant in this environment, leaving direction tied to developments in oil and geopolitics.
USD/JPY hovers below 160 amid intervention fears and Middle-East tensions
The American currency is losing ground as traders react to inflation data and focus on the situation in the Middle East.
The US dollar started off the week on the soft side, only to turn around yet again.
The pair managed again to hit another correction while still facing the support zone of 157.25-65, which could hold prices inside this trading zone toward resistances 160.20 or 161.95. Above 161.95 the market could enter a new uptrend wave with first target toward 163.80.