Yen Strengthens, USD/JPY Falls Amid Escalating Iran Conflict
The USD/JPY pair weakened in early Asian trading on Thursday, dropping to around 158.96, as the Japanese yen strengthened on increased demand for safe-haven assets amid escalating conflicts in the Middle East.
Risk sentiment worsened after Iran launched what was described as its most intense operation since the beginning of the war. Tehran also stepped up efforts to halt traffic through the Strait of Hormuz, a vital global energy shipping route. Meanwhile, the US military rejected requests to escort tankers or civilian ships through the strait until the threat of Iranian fire subsided, while the Israeli military declared a wave of large-scale attacks targeting Hezbollah infrastructure.
This situation pushed market participants back into currencies considered defensive, such as the yen. The market also assessed any signs of worsening tensions between Iran and its neighbors, the US, and Israel, as potentially adding pressure on the USD/JPY in the near term.
Data-wise, US inflation remained in line with expectations. The US Consumer Price Index (CPI) rose 0.3% month-on-month in February, in line with estimates and higher than the previous month's 0.2%. Meanwhile, the core CPI (excluding food and energy) rose 0.2% in February, slowing from the previous 0.3%, also in line with estimates.
The market now anticipates the Fed will hold interest rates at its March 18 policy meeting. Market participants' focus has shifted from the CPI release to rising oil prices, which have the potential to push headline inflation higher again in the coming months.
In addition to geopolitical developments, market attention this Thursday is also focused on the release of US Initial Jobless Claims, which could influence the direction of the dollar and the movement of USD/JPY. (asd)
Source: Newsmasker.id
