USD/JPY rises beyond 157.00 amid higher Oil prices.
Trump's refusal of Iran's peace proposal has curbed hopes of Hormuz reopening.
Ongoing risks of a Tokyo intervention are likely to keep US Dollar rallies limited.
The US Dollar (USD) appreciates against the Japanese Yen (JPY) on Monday, retracing Friday’s losses and returning to levels above 157.00 at the time of writing. The jump in Oil prices after US President Donald Trump’s rejection of Iran’s peace proposal is underpinning the US Dollar’s recovery, with risks of a Tokyo intervention still alive.
Trump posted on social media that Tehran’s response to the US peace proposal is “totally unacceptable”, which has crushed hopes of a swift end to the war and pushed back expectations of a prompt reopening of the Strait of Hormuz. Oil prices rallied after the news, with the WTI barrel appreciating about $3 to $94.50 and Brent Oil returning above the key $100 level.
On Friday, US Nonfarm Payrolls data revealed that the economy created almost twice the 62K jobs expected, with a 115K increase in April. This shows some stabilisation of the labour market and eases pressure on the Federal Reserve to cut rates anytime soon. Considering the hot inflationary pressures, these figures back the claims of Fed hawkish dissenters and provides suppor to the US Dollar.
The Japanese Yen's sellers, however, are likely to remain cautious, as the risks of a Tokyo intervention remain high after several alleged interventions in the last two weeks. Reports from Reuters suggest that the Japanese Ministry of Finance might have spent nearly JPY 10 trillion (USD 63.7 billion) in several interventions since the first one, which allegedly took place on April 28.
US Treasury Secretary Scott Bessent is planning to visit Tokyo next week, where he will discuss the Japanese Yen weakness, and Tokyo authorities will look for US support to fight speculative moves. This is likely to keep JPY bears on edge.
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