Japanese Yen bears turn cautious amid intervention fears as Iran deal undermines USD

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The USD/JPY pair holds steady above mid-160.00s during the Asian session on Thursday, consolidating its gains registered over the past four days to the highest level since July 2024.

USD/JPY bulls pause as intervention fears support the JPY amid a modest USD downtick.
The US-Iran peace deal optimism counters the Fed’s hawkish tilt and weighs on the USD.
The US-Japan rate differential should cap the JPY and help limit the downside for the pair.

The USD/JPY pair holds steady above mid-160.00s during the Asian session on Thursday, consolidating its gains registered over the past four days to the highest level since July 2024. The US Dollar (USD) pulls back following Wednesday's hawkish Federal Reserve (Fed)-inspired rally to a fresh high since late March amid the latest optimism over a US-Iran peace deal. Adding to this, intervention fears offer some support to the Japanese Yen (JPY) and contribute to capping the currency pair.

US President Donald Trump and Iranian President Masoud Pezeshkian electronically signed a Memorandum of Understanding (MoU) aimed at ending hostilities between the two countries and reopening the Strait of Hormuz. Furthermore, Trump said that the 60-day negotiation period to reach a final agreement on Iran's nuclear program is not a hard deadline, boosting investors' confidence. This, in turn, prompts some USD profit-taking and turns out to be a key factor acting as a headwind for the USD/JPY pair.

Meanwhile, traders remain on high alert amid speculations that Japanese authorities will step in again to prop up the domestic currency. In fact, Japan's top foreign exchange diplomat, Atsushi Mimura, and Finance Minister Satsuki Katayama have issued repeated warnings that Tokyo is monitoring speculative moves and remains fully prepared to curb further JPY weakness. This, along with the Bank of Japan's (BoJ) historic rate hike to the highest since 1995, limits further JPY losses and caps the USD/JPY pair.

That said, Japan's borrowing costs remain lower than those of peer nations, including the US. In fact, the Federal Reserve (Fed) signaled the possibility of at least one rate hike this year after leaving its benchmark overnight borrowing rate anchored in the 3.5%-3.75% range on Wednesday. The persistently wide interest rate differential with the US keeps the JPY carry trade active, suggesting that the path of least resistance for the USD/JPY pair remains to the upside, and any corrective pullback should be bought into.

Japanese Yen Price Last 30 days

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 30 days. Japanese Yen was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		1.21%	0.91%	1.16%	2.66%	1.98%	1.53%	1.81%
EUR	-1.21%		-0.28%	-0.04%	1.44%	0.79%	0.30%	0.61%
GBP	-0.91%	0.28%		0.26%	1.73%	1.05%	0.60%	0.89%
JPY	-1.16%	0.04%	-0.26%		1.48%	0.74%	0.34%	0.60%
CAD	-2.66%	-1.44%	-1.73%	-1.48%		-0.64%	-1.12%	-0.82%
AUD	-1.98%	-0.79%	-1.05%	-0.74%	0.64%		-0.46%	-0.16%
NZD	-1.53%	-0.30%	-0.60%	-0.34%	1.12%	0.46%		0.28%
CHF	-1.81%	-0.61%	-0.89%	-0.60%	0.82%	0.16%	-0.28%

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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

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