- The Japanese Yen (JPY) is falling after recent gains
- US Navy blockade of Iranian ships
- The US Dollar (USD) is falling against major peers
- US PPI data is due this week
The US dollar Japanese yen (USD/JPY) exchange rate is rising after losses last week. The pair fell -0.18% in the previous week, settling on Friday at 159.30. On Monday at 22:30 UTC, USD/JPY trades +0.06% at 159.39 and traded in a range of 159.29 to 159.39.
The Japanese yen is falling on Monday as investors weigh the latest developments in the Middle East and reassess risk sentiment.
Peace talks between the U.S. and Iran collapsed over the weekend, prompting President Trump to announce a naval blockade on Iranian shipping in an effort to increase pressure on Tehran, leaving the fragile ceasefire in doubt.
Market sentiment deteriorated early in the session, with oil prices jumping as much as 8.5% to above $100 per barrel before easing slightly, although prices remain above this key psychological level. The blockade is expected to remove around 2 million barrels per day from global supply, tightening the market and reinforcing inflation concerns.
Despite Japan’s heavy reliance on imported energy, the yen has gained, supported by safe-haven demand as geopolitical risks intensify.
The U.S. dollar is rising versus the yen but falling versus its major peers. The U.S. Dollar Index, which measures the currency against a basket of major peers, is falling 0.29% to 98.37, extending losses for a sixth day.
Meanwhile, the U.S. dollar is weakening for a sixth consecutive session, as investors digest the geopolitical backdrop alongside reports that Iran may be considering halting its uranium enrichment programme.
Looking ahead, attention will turn to U.S. inflation data, particularly PPI, which is expected to rise as higher energy prices feed through to producer costs. This follows last week’s CPI release, which showed inflation accelerating to 3.3% year-on-year from 2.4%.
Persistently elevated inflation supports the view that the Federal Reserve will keep interest rates higher for longer, with money markets currently pricing in less than a 20% probability of rate cuts this year.