USD/JPY shows resilience around the 159.00 mark during the early European session on Monday. Iran has issued a warning regarding potential retaliation following the US’s action in seizing the ship. BoJ’s Ueda refrained from suggesting an April rate hike; Japanese authorities remain vigilant regarding potential FX intervention. The USD/JPY pair is currently positioned in positive territory, hovering around 159.00 in the early European session on Monday. The resurgence of tensions between the United States and Iran, coupled with the closure of the Strait of Hormuz, exerts pressure on the Japanese Yen in relation to the US Dollar.
On Sunday, US President Donald Trump announced that US Marines had apprehended a vessel attempting to breach the American blockade on Iranian ports, according to the Guardian. Iran’s Foreign Ministry spokesman Esmail Baghaei stated that the US blockade of Iran’s ports and coastline constitutes an act of aggression that breaches the ceasefire. Ongoing tensions between the US and Iran are likely to bolster the Greenback in the short term.
Bank of Japan Governor Kazuo Ueda on Friday refrained from indicating an April rate hike, pointing to significant economic uncertainty stemming from the “negative supply shock” caused by the war. There is a prevailing expectation in the markets that the Japanese central bank will maintain its current interest rates until at least June 2026. Nonetheless, the pair is currently positioned near a crucial threshold, heightening concerns regarding potential intervention. Finance Minister Satsuki Katayama indicated that Japan is monitoring markets with a “high sense of urgency” and stands ready to intervene against speculative activities.