Japanese Yen rallies against weaker USD amid looming intervention risks

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USD/JPY attracts sellers for the second straight day as intervention fears lift the JPY.
The less hawkish FOMC Minutes weigh on the USD, contributing to the intraday fall.
The wide US-Japan rate differential and Iran risks should limit losses for the major.

The USD/JPY pair meets with a heavy supply during the Asian session on Friday and weakens below the 162.00 mark as traders remain on high alert amid expectations of a potential government intervention to prop up the Japanese Yen (JPY). Furthermore, some follow-through US Dollar (USD) selling turns out to be another factor exerting downward pressure on spot prices for the second straight day.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, drops to a fresh weekly low in the wake of the less-hawkish FOMC Minutes, which revealed that policymakers were divided with regard to the direction of interest rates. That said, traders are still pricing in around a 65% chance that the US Federal Reserve (Fed) will raise borrowing costs in September. This, along with persistent geopolitical uncertainties, could limit deeper losses for the safe-haven buck and offer some support to the USD/JPY pair.

In the latest developments, the US military unleashed a new wave of strikes against Iran earlier this week in retaliation for Iran's attacks on commercial ships in the Strait of Hormuz. Iran responded by targeting American allies and bombing US military installations across Bahrain and Kuwait. Moreover, US President Donald Trump said on Wednesday that the memorandum of understanding with Iran aimed at ending the conflict in the Middle East was over. This keeps geopolitical risks in play and favors the USD bulls.

Meanwhile, investors remain worried about economic risks due to continued energy supply disruptions in the Strait of Hormuz, as Japan relies on the Middle East for over 90% of its Crude Oil imports. Furthermore, borrowing costs in Japan remain significantly lower compared to other Western economies, including the US. This might hold back traders from placing aggressive bullish bets on the JPY, warranting caution before confirming that the USD/JPY pair has topped out and positioning for further losses.

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 Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.13%	-0.16%	-0.39%	-0.09%	-0.06%	-0.38%	-0.24%
EUR	0.13%		-0.03%	-0.22%	0.04%	0.06%	-0.25%	-0.11%
GBP	0.16%	0.03%		-0.20%	0.07%	0.08%	-0.22%	-0.10%
JPY	0.39%	0.22%	0.20%		0.27%	0.30%	-0.04%	0.09%
CAD	0.09%	-0.04%	-0.07%	-0.27%		0.02%	-0.30%	-0.17%
AUD	0.06%	-0.06%	-0.08%	-0.30%	-0.02%		-0.32%	-0.21%
NZD	0.38%	0.25%	0.22%	0.04%	0.30%	0.32%		0.12%
CHF	0.24%	0.11%	0.10%	-0.09%	0.17%	0.21%	-0.12%

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).