The USD/JPY pair is advancing, approaching the level of 159.35 during the Asian session on Friday. Trump indicated that the upcoming meeting between the US and Iran could occur this weekend. Japan’s Katayama suggested the possibility of JPY intervention following discussions with the US counterpart. The USD/JPY pair shows resilience, trading at approximately 159.35 during the Asian session on Friday. The pair continues its upward trend for the third straight day amidst ongoing uncertainty in the Middle East. Nevertheless, increasing intervention alerts from Japanese authorities could limit the potential gains for USD/JPY.
On Thursday, US President Donald Trump announced that Israel and Lebanon have reached an agreement for a 10-day ceasefire. The situation in the Middle East continues to be fraught with uncertainty, as the Lebanese army reported on Friday that it had documented several ceasefire violations by Israel following the implementation of the truce at midnight local time on Friday. Rising tensions in the Middle East could strengthen the US Dollar against the Japanese Yen. Market participants will pay close attention to the upcoming second round of negotiations between the US and Iran, which may occur this weekend.
Earlier on Thursday, Trump conveyed a positive outlook regarding the potential for the US and Iran to secure a lasting ceasefire before its expiration next week. Concerns regarding intervention by Japanese authorities may support the JPY and provide a favorable momentum for the pair. Japan’s Finance Minister Satsuki Katayama stated on Thursday that she has engaged in detailed discussions regarding foreign exchange matters with US Treasury Secretary Scott Bessent, emphasizing that authorities are ready to take “bold” action if necessary.
Earlier Friday, Bank of Japan Governor Kazuo Ueda stated that any decision regarding the timing of interest rate increases must consider the current low level of the nation’s real interest rate. He noted that Japan is experiencing increasing inflation due to a “negative supply shock,” which poses greater challenges for control through monetary policy compared to inflation spurred by robust demand.