USD/JPY drops sharply on suspected Japan intervention, easing US-Iran tensions

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USD/JPY drops sharply on Wednesday and trades around 155.80 at the time of writing, down 1.31% on the day, as the Japanese Yen (JPY) benefits from both suspected intervention by Japanese authorities and broad-based weakness in the US Dollar (USD).

The Japanese Yen strengthens sharply amid suspicions of intervention by Japanese authorities in the FX market.
Axios reports that Washington and Tehran are close to a deal aimed at ending the conflict and reopening nuclear talks.
Easing geopolitical tensions weigh on the US Dollar and accelerate the decline in USD/JPY.

According to Axios, the United States (US) and Iran are close to reaching a memorandum of understanding aimed at ending the conflict and opening a broader negotiation phase regarding Iran’s nuclear program. The discussions reportedly include a gradual easing of restrictions around the Strait of Hormuz, an Iranian moratorium on nuclear enrichment, as well as an easing of US sanctions and the release of billions of dollars in frozen Iranian funds.

The US news outlet added that the White House expects Tehran to respond on several key points within the next 48 hours. A Pakistani source involved in the diplomatic efforts also told Reuters that both sides were “very close” to finalizing a deal.

These developments are fueling a strong risk-on move across financial markets and reducing the geopolitical risk premium linked to fears of disruptions to global energy supply. The US Dollar Index (DXY) loses 0.80% on Wednesday and falls to near 97.70 at the time of press, adding further bearish pressure on USD/JPY.

At the same time, investors remain alert to the possibility of further intervention by Japan’s Ministry of Finance. Japanese authorities are suspected of having already spent around 5.48 trillion JPY, or nearly $35 billion, last week to support the Japanese currency after USD/JPY breached the psychological 160.00 level.

Japanese Finance Minister Satsuki Katayama recently reiterated that Tokyo remains ready to take “decisive measures” against speculative moves in the foreign exchange market. MUFG also estimates that the recent decline in USD/JPY is consistent with another intervention by Japanese authorities.

Markets are now awaiting the US ADP Employment Change report later on Wednesday, ahead of Friday’s official labor market figures.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.77%	-0.66%	-1.20%	-0.16%	-1.06%	-1.51%	-0.64%
EUR	0.77%		0.10%	-0.48%	0.63%	-0.29%	-0.77%	0.13%
GBP	0.66%	-0.10%		-0.62%	0.53%	-0.39%	-0.86%	0.05%
JPY	1.20%	0.48%	0.62%		1.11%	0.18%	-0.27%	0.65%
CAD	0.16%	-0.63%	-0.53%	-1.11%		-0.91%	-1.36%	-0.47%
AUD	1.06%	0.29%	0.39%	-0.18%	0.91%		-0.45%	0.44%
NZD	1.51%	0.77%	0.86%	0.27%	1.36%	0.45%		0.90%
CHF	0.64%	-0.13%	-0.05%	-0.65%	0.47%	-0.44%	-0.90%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).