USD/JPY climbs on safe-haven Dollar demand, despite BoJ rate hike expectations

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USD/JPY trades around 157.50 on Monday at the time of writing, up 0.84% on the day, moving closer to the February high at 157.66 and maintaining a bullish tone supported by the strength of the US Dollar (USD).

USD/JPY posts solid gains as the US currency benefits from renewed safe-haven demand.
Comments from a BoJ official keep the prospect of further rate hikes alive.
Investors await the ISM Manufacturing index and upcoming US employment data.

The Greenback benefits from a marked increase in risk aversion amid escalating military tensions involving the United States (US), Israel and Iran. The US Dollar Index (DXY), which measures the Dollar against a basket of six major currencies, rises firmly and supports Dollar-denominated pairs. Demand for safe-haven assets intensifies as the Middle East war fuels concerns about a prolonged conflict, strengthening the US currency.

On the Japanese side, the Japanese Yen (JPY) shows relative resilience, supported by its own safe-haven status. However, the advance in USD/JPY indicates that US Dollar strength currently outweighs defensive flows into the Japanese currency. Comments from Bank of Japan (BoJ) Deputy Governor Ryozo Himino maintain the prospect of additional monetary tightening. He noted that the central bank could continue to gradually raise interest rates toward a neutral level if economic and inflation projections materialize, even if headline inflation temporarily falls below the 2% target.

These remarks come as recent data show a slowdown in core inflation in Tokyo, reviving questions about the exact timing of the next rate hike. BoJ Governor Kazuo Ueda recently reiterated that the institution stands ready to adjust policy if price and growth outlooks strengthen, leaving the door open to a gradual normalization process.

In the United States, market attention now turns to a data-heavy week. The ISM Manufacturing Purchasing Managers Index (PMI) for February is due at 15:00 GMT and is expected to ease slightly to 51.8 from 52.6 previously, while remaining in expansion territory. Sub-components related to Employment, New Orders and Prices Paid will be closely monitored to assess the strength of industrial activity and its implications for the path of the Federal Reserve (Fed).

More broadly, investors are preparing for heightened volatility ahead of key labor market releases, including the Nonfarm Payrolls (NFP) report scheduled later this week. Weaker-than-expected figures could revive expectations of monetary easing from the Fed and weigh on the US Dollar, while robust data would reinforce the case for a prolonged restrictive stance, potentially supporting USD/JPY.

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 Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.92%	0.59%	0.82%	0.26%	0.79%	1.03%	1.17%
EUR	-0.92%		-0.33%	-0.11%	-0.65%	-0.13%	0.10%	0.25%
GBP	-0.59%	0.33%		0.23%	-0.33%	0.20%	0.43%	0.57%
JPY	-0.82%	0.11%	-0.23%		-0.54%	-0.02%	0.22%	0.36%
CAD	-0.26%	0.65%	0.33%	0.54%		0.53%	0.75%	0.91%
AUD	-0.79%	0.13%	-0.20%	0.02%	-0.53%		0.23%	0.38%
NZD	-1.03%	-0.10%	-0.43%	-0.22%	-0.75%	-0.23%		0.14%
CHF	-1.17%	-0.25%	-0.57%	-0.36%	-0.91%	-0.38%	-0.14%

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).