USD/JPY Weakens in Asia, Hormuz Risk Limits Yen Strength
USD/JPY weakened again in the Asian session on Thursday (April 16th) after failing to maintain the previous day's slight gains. The currency fell to the 158.72–158.65 range and remained near the weekly trough touched on Tuesday, as the weakening US dollar remained dominant.
Pressure on the dollar came from improving global risk sentiment amid hopes that the US-Iran ceasefire could be extended and negotiations resumed. President Donald Trump's statement that the war with Iran was "almost over" reinforced the view of de-escalation, reducing demand for the dollar as a safe-haven asset and pressuring USD/JPY.
Oil prices, which remained near their recent lows, also eased inflation concerns, limiting market expectations of a more hawkish Fed policy stance. Meanwhile, the yen received support from speculation that Japanese authorities could intervene to stem the weakening domestic currency, which added downward pressure on USD/JPY.
However, economic risks from instability in the Strait of Hormuz are considered to limit further yen strength. Japan relies heavily on energy imports from the Middle East, and the US Navy's blockade of shipping in and out of Iran has the potential to further restrict already disrupted oil flows, raising concerns about the potential for pressure on Japanese economic activity in the near term.
Technically, the USD/JPY has remained within a relatively familiar range for the past month or so, so the market is likely awaiting confirmation of a stronger weakness before extending the correction from the mid-160s reached last month. The lack of major US macro data releases has shifted market attention to the speeches of FOMC officials, which have the potential to trigger the dollar's direction and the subsequent movement of the USD/JPY. (asd)
Source: Newsmaker.id
