USD/JPY Rises to 159.40, Middle East Risks Boost Dollar
USD/JPY strengthened to around 159.35 during the Asian session on Friday (April 17), extending its gains for a third consecutive day. The yen weakened amid Middle East geopolitical uncertainty, which boosted demand for the US dollar, although warnings of intervention from Japanese authorities could potentially limit further gains.
US President Donald Trump said Israel and Lebanon had agreed to a 10-day ceasefire. However, uncertainty remains high after the Lebanese military reported several Israeli ceasefire violations after the ceasefire took effect at midnight local time on Friday, maintaining a risk-off bias and supporting the dollar against the yen.
Market participants are also awaiting a second round of US-Iran negotiations, which could potentially take place later this week. Trump previously expressed optimism that the US and Iran could reach a more permanent ceasefire before the agreement expires next week, making news of the negotiations a key driver of risk sentiment and the direction of USD/JPY.
In Japan, rising intervention concerns helped contain the yen's weakness. Japanese Finance Minister Satsuki Katayama stated that he had close discussions on foreign exchange issues with US Treasury Secretary Scott Bessent and emphasized that authorities are ready to take "bold" action if necessary to respond to exchange rate fluctuations.
From a policy perspective, Bank of Japan Governor Kazuo Ueda emphasized that the decision on how quickly interest rates should be raised needs to take into account the fact that Japan's real interest rates remain low. Ueda also assessed that Japan is facing rising inflation due to a "negative supply shock," which is more difficult to control with monetary policy than demand-driven inflation. Therefore, the market will weigh a combination of geopolitical risks, the possibility of intervention, and the direction of the BoJ's communication as the next determinants of USD/JPY. (asd)
Source: Newsmaker.id
