Yen Strengthens, Hormuz Risks Hold Market Confidence
USD/JPY continued its correction from the 159.85 area and moved lower during the Asian session on Tuesday (April 14), with the price dropping to around 159.00. However, downside room is considered limited as the market received mixed fundamental signals.
Pressure on this currency came primarily from the weakening US dollar, as investors rekindled hopes that the US-Iran diplomatic path was not closed despite the failure of weekend talks to produce a breakthrough. Comments by US Vice President JD Vance that there had been "meaningful progress" also bolstered de-escalation sentiment, reducing the dollar's safe-haven support and pressuring USD/JPY.
The dollar was also weighed down by uncertainty about the direction of Federal Reserve interest rates. US inflation data on Friday reportedly jumped the most in nearly four years, triggering a shift in focus to the possibility of a rate hike this year. However, market participants have not completely abandoned bets on a rate cut, especially when signs of potential geopolitical tensions have emerged.
On the yen side, the yen's strengthening tended to be less aggressive due to concerns about the Japanese economy being affected by external energy shocks following instability in the Strait of Hormuz. President Donald Trump declared a US naval blockade of the strategic waterway had begun and threatened to destroy any Iranian warships approaching, while Iran responded with threats against ports in the Persian Gulf and the Gulf of Oman.
Japan's dependence on oil imports from the Middle East has created this uncertainty, fueling concerns that the economy could suffer in the near term, thus curbing buying interest in a stronger yen. At the same time, speculation that Japanese authorities could intervene to curb the weakening JPY has the potential to limit USD/JPY movements, keeping the market sensitive to geopolitical headlines and central bank policy expectations. (asd)
Source: Newsmaker.id
