The Japanese Yen (JPY) trades under pressure against the US Dollar (USD) on Friday, with USD/JPY trimming most of its losses from earlier in the week as ongoing Oil supply disruptions linked to Middle East tensions keep a lid on the Yen’s recovery despite a softer Greenback.
At the time of writing, the pair is trading around 159.30, remaining confined within a one-month trading range as traders stay cautious near the 160.00 handle, a level that previously triggered intervention from Japanese authorities. Recent comments from Japanese officials have reinforced expectations that authorities may step in to curb excessive moves, keeping upside attempts in check.
Meanwhile, traders continue to monitor developments surrounding the US-Iran ceasefire, with attention turning to upcoming negotiations scheduled to take place in Pakistan over the weekend. However, the outlook remains uncertain, as conflicting signals from the United States and Iran continue to cloud the diplomatic path.
Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said a ceasefire in Lebanon and the release of Iranian blocked assets must be secured before negotiations can proceed.
At the same time, US President Donald Trump told The New York Post that US warships are being reloaded with “the best ammunition” to resume strikes on Iran if peace talks fail, underscoring the fragile nature of the situation.
This backdrop is helping limit further downside in the US Dollar, which had weakened sharply to one-month lows following the initial ceasefire announcement. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.67 after touching an intraday low near 98.50, though it remains on track for its biggest decline since January.
On the data front, rising Oil prices pushed US inflation higher in March, with headline CPI rising 0.9% MoM, up sharply from 0.3% in the previous month, while annual inflation accelerated to 3.3% from 2.4%, with both readings matching expectations. The firm print reinforces the view that the Federal Reserve (Fed) is likely to remain on hold in the near term, as both sides of its dual mandate face risks.
In Japan, Bank of Japan Deputy Governor Ryozo Himino said on Friday that he does not believe the economy is in stagflation, but acknowledged a policy dilemma if a prolonged Middle East conflict were to slow growth while accelerating inflation.
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