USD/JPY nears 160.00 again as markets brace for a protracted Iran war
Oleh Guillermo Alcala
Dikemas kini: 2 Apr 2026
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The US Dollar (USD) is outperforming its peers on Thursday, and rallies about 0.6% against the Japanese Yen on Thursday.
- USD/JPY rallies on risk-off markets, returning to 159.70 after bouncing at 158.27 on Wednesday.
- The Dollar appreciates across the board as Trump pushes back hopes of a quick end to the war.
- The pair is nearing 160.00 again, increasing the risks of a BoJ intervention.
The US Dollar (USD) is outperforming its peers on Thursday, and rallies about 0.6% against the Japanese Yen on Thursday. The pair hits session highs at 159.70, at the time of writing, after bouncing from lows at 158.27 on Wednesday, drawing closer to the key 160.00 level, considered a line in the sand for Yen intervention.
The USD/JPY pair changed course on Wednesday after US President Donald Trump rattled markets, reiterating its aggressive rhetoric against Iran in a televised message that was widely expected to deliver a plan to end the hostilities. Trump, instead, repeated its threats to take Iran back to the Stone Age and called allies to build up the courage to reopen the Strait of Hormuz.
Tehran responded with threats of "devastating attacks" on the US and Israel and deemed US proposals to end the war as “maximalist and irrational”. Meanwhile, the war enters its 34th day, with Iran and Israel exchanging missile and drone attacks.
In this context, the USD/JPY has found a door open to regain all the ground lost over the previous two days, and draws closer to the 160.00 level, which might trigger a fresh intervention warning by Japanese authorities
On Monday, Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, affirmed that Tokyo is ready to take “decisive” action if speculative moves persist. On Tuesday, Finance Minister Satsuki Katayama observed “speculative moves heightening in currency markets” and reiterated the authorities’ “readiness to respond” on all fronts against volatile moves.
The Bank of Japan tends to intervene on days of low trading volume, aiming to enhance the impact of its actions. In that sense, Good Friday could offer a favourable scenario, with most European markets closed and the US Nonfarm Payrolls report scheduled, which might boost market volatility.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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