Japanese Yen remains depressed amid Hormuz standoff; USD/JPY eyes 160.00 on firmer USD
- USD/JPY gains positive traction for the fourth straight day amid a combination of supporting factors.
- Mideast tensions, inflation fears, and less dovish Fed bets continue to underpin the safe-haven USD.
- Economic concerns due to energy supply disruptions and delayed BoJ rate hike bets weigh on the JPY.
The USD/JPY pair attracts some buyers for the fourth consecutive day and trades around the 159.65-159.70 area, or a one-and-a-half-week top during the early European session on Thursday. Spot prices, however, remain confined within a familiar range, held over the past month or so as traders seem reluctant to place aggressive directional bets amid a combination of diverging forces.
Despite a temporary extension of the US-Iran ceasefire, the lack of progress in peace talks and the standoff over the Strait of Hormuz continue to weigh on investors' sentiment. Moreover, the risk of a further escalation of tensions remains supportive of elevated Crude Oil prices, fueling inflationary concerns and tempering dovish US Federal Reserve (Fed) expectations. This, in turn, is seen underpinning the US Dollar's (USD) reserve currency status and acting as a tailwind for the USD/JPY pair.
The Japanese Yen (JPY), on the other hand, is weighed down by worries that Japan's economy will come under substantial strains due to continued disruptions to energy supplies from the Middle East. Adding to this, growing acceptance that the Bank of Japan (BoJ) will hold interest rates steady at its upcoming April policy meeting turns out to be another factor undermining the JPY and supporting the USD/JPY pair. The BoJ, however, is still expected to show readiness to raise borrowing costs as soon as June.
Furthermore, speculations that Japanese authorities will step in to stem further weakness in the domestic currency hold back the JPY bears from placing aggressive bets and keep a lid on any further appreciating move for the USD/JPY pair. Hence, it will be prudent to wait for a sustained move beyond the 160.00 psychological mark, also representing the top boundary of a short-term trading range hurdle, before positioning for the resumption of over a two-month-old uptrend from the February swing low.
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.32% | -0.04% | 0.54% | -0.11% | -0.38% | -0.45% | 0.40% | |
| EUR | -0.32% | -0.36% | 0.24% | -0.42% | -0.67% | -0.80% | 0.08% | |
| GBP | 0.04% | 0.36% | 0.60% | -0.06% | -0.31% | -0.44% | 0.44% | |
| JPY | -0.54% | -0.24% | -0.60% | -0.69% | -0.87% | -1.02% | -0.14% | |
| CAD | 0.11% | 0.42% | 0.06% | 0.69% | -0.15% | -0.34% | 0.51% | |
| AUD | 0.38% | 0.67% | 0.31% | 0.87% | 0.15% | -0.07% | 0.76% | |
| NZD | 0.45% | 0.80% | 0.44% | 1.02% | 0.34% | 0.07% | 0.85% | |
| CHF | -0.40% | -0.08% | -0.44% | 0.14% | -0.51% | -0.76% | -0.85% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
