USD/JPY remains stable around 159.05 during the early hours of Wednesday’s Asian session. Trump indicated that a new US attack could occur in the coming days if an agreement is not achieved. Market participants paid little attention to the robust Japanese GDP growth figures; however, apprehensions regarding potential intervention may continue to support the Japanese Yen. The USD/JPY pair is currently trading steadily at approximately 159.05 in the early hours of the Asian session on Wednesday. The possible upside for the pair could be constrained due to concerns regarding intervention from Japanese authorities. Market participants are analyzing the recent developments regarding US negotiations with Iran aimed at resolving the conflict.
The upcoming release of Japan’s April National Consumer Price Index inflation report is set to attract significant attention later on Friday. US President Donald Trump on Tuesday indicated the possibility of renewing strikes on Iran within “two or three days” as part of efforts to negotiate a resolution to the conflict, according to source. On Monday, Trump announced that he had halted a planned return to hostilities after receiving a new proposal from Tehran aimed at resolving the US-Israeli conflict. In the meantime, an Iranian official has indicated that the US’s threat of a significant attack at any time will be addressed “resolutely,” asserting that Iran is “ready to face any military aggression.”
Indicators of an extended conflict between the US and Iran may strengthen the US Dollar relative to the Japanese Yen in the short term. Regarding the JPY, market participants dismissed Japan’s stronger-than-anticipated Gross Domestic Product growth figures for the first quarter. “Though Japan’s GDP grew healthily by 0.5% in Q1, we think the Q1 GDP is already in the rear-view mirror and expect the economy to feel the strains from high energy costs ahead,” stated Norihiro Yamaguchi.
Japanese officials are closely monitoring the situation for potential currency intervention, which could bolster the JPY and serve as a challenge for the pair. Finance Minister Satsuki Katayama stated on Monday that Japan is prepared to respond to excessive foreign exchange volatility at any moment, while ensuring that any intervention is carried out in a manner that does not lead to an increase in U.S. Treasury yields.