Japanese Yen sticks to losses vs USD as bears shrug off intervention fears amid Iran risks

USD/JPY catches fresh bids on Monday and draws support from a combination of factors.
The wide rate gap and economic concerns due to the Middle East crisis undermine the JPY.
The US-Iran standoff and Fed hike bets support the USD, contributing to the pair’s move up.

Haresh Menghani FXStreet

The USD/JPY pair sticks to its modest intraday gains through the early European session on Monday and currently trades above the 162.00 mark, up 0.30% for the day. Moreover, spot prices remain well within striking distance of a four-decade high, touched early this month, and seem poised to appreciate further amid a supportive fundamental backdrop.

The Japanese Yen (JPY) continues with its relative underperformance as the wide rate differential between Japan and other major economies, including the US, keeps the so-called carry trade active. Adding to this, concerns that Japan’s economy will remain under strain from Strait of Hormuz risks, as the nation relies on the Middle East for over 90% of its crude oil, exert additional pressure on the JPY. This, along with a modest US Dollar (USD) strength, turns out to be another factor acting as a tailwind for the USD/JPY pair.

The geopolitical risk premium is back in play amid a further escalation of tensions between the US and Iran, which, in turn, helps the safe-haven USD to build on Friday's goodish rebound from over a one-week low. In fact, the US unleashed a major round of strikes on Iran over the weekend, while Iran responded with missile attacks on US military bases in the Gulf. Moreover, Iran’s Islamic Revolutionary Guard Corps (IRGC) fired at another commercial vessel in the Strait of Hormuz and announced the closure of the critical waterway.

This, in turn, triggers a fresh leg up in Crude Oil prices, which revive concerns about energy-driven inflationary pressures and reaffirm market bets that the US Federal Reserve (Fed) will hike interest rates at least once in 2026. Meanwhile, Japan's Chief Cabinet Secretary, Minoru Kihara, said that the Government Pension Investment Fund (GPIF) has the mandate to tweak its basic portfolio as need be, raising hopes for more investment in domestic ‌assets. This, however, fails to impress the JPY bulls or cap the upside for the USD/JPY pair.

That said, looming intervention risks could help limit deeper JPY losses. The USD bulls also seem reluctant and opt to wait for more cues about the US central bank's policy path before placing fresh bets. Hence, the focus will remain glued to Fed Chair Kevin Warsh's congressional testimony later this week. Apart from this, the crucial US inflation figures – the Consumer Price Index and the Producer Price Index (PPI) due on Tuesday and Wednesday, should provide some meaningful impetus to the Greenback and the USD/JPY pair.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.08%	0.06%	0.26%	-0.07%	0.23%	-0.21%	-0.03%
EUR	0.08%		0.14%	0.33%	0.00%	0.33%	-0.09%	0.07%
GBP	-0.06%	-0.14%		0.20%	-0.14%	0.20%	-0.22%	-0.03%
JPY	-0.26%	-0.33%	-0.20%		-0.33%	-0.02%	-0.43%	-0.22%
CAD	0.07%	-0.01%	0.14%	0.33%		0.32%	-0.07%	0.11%
AUD	-0.23%	-0.33%	-0.20%	0.02%	-0.32%		-0.37%	-0.19%
NZD	0.21%	0.09%	0.22%	0.43%	0.07%	0.37%		0.19%
CHF	0.03%	-0.07%	0.03%	0.22%	-0.11%	0.19%	-0.19%

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.

GBP/USD stays below 1.3600 on modest USD strength

GBP/USD is consolidating near the lower end of its weekly range, below the 1.3600 mark, during European trading hours on Thursday. The pair's downside, however, remains cushioned as traders await Fed Chair Warsh's speech on Friday for more cues about the US central bank's interest rate path before placing fresh directional bets.

EUR/USD drops to fresh weekly lows below 1.1650

EUR/USD stays on the back foot and trades at its lowest level in a week below 1.1650 on Thursday. The European Central Bank's policy meeting accounts fail to help the Euro stay resilient, while the cautious market mood supports the USD and weighs on the pair. Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday will be critical for the pair's next direction.

Gold holds steady around $4,600 as traders eye Fed's Warsh for rate cues

Gold languishes near the $4,600 mark through the first half of the European session on Thursday and remains close to the weekly low it touched the previous day. The downside, however, seems limited as traders opt to wait for US Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday for cues on the future policy path. The outlook, in turn, will play a key role in influencing the US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

Ripple eases to $1.40, Solana hits $100, DOGE capped below $0.10

Ripple (XRP) and Dogecoin (DOGE) are facing downside pressure after double-digit gains last week, while Solana (SOL) extends its rally to $100. The technical outlook for XRP, SOL, and DOGE points to potential upside as the broader market sustains a risk-on sentiment.

Jackson Hole kicks off after upside PCE surprise

Fed's annual Jackson Hole conference will take place. This year's topic is "Financial Innovation: Implications for Payments and Policy". The main market mover during the conference is Fed chairman Warsh's speech on Friday. Markets will look for any hints about monetary policy in September. We expect Warsh to continue his pattern of providing little to no forward guidance.

Kevin Warsh’s Jackson Hole dilemma: Say too much, too little, or just enough

Kevin Warsh is preparing to deliver his first Jackson Hole speech as Federal Reserve (Fed) Chair on Friday, and expectations extend well beyond whether interest rates will be raised or left unchanged in September.