Persistent Middle East tensions and Fed rate hike bets lift the USD, pressuring the JPY despite stronger-than-expected Japanese GDP growth.
The USD/JPY pair extended its rally for a seventh straight session, climbing to a nearly three-week high above 159.00 in early European trading on Tuesday. The move reflects renewed USD strength amid geopolitical uncertainties and rising expectations of a U.S. Federal Reserve interest rate hike.
Japan’s GDP growth exceeded forecasts in the first quarter, but the JPY remained under pressure due to concerns over Middle East conflicts. Meanwhile, the USD regained traction after a brief pullback, supported by its safe-haven status as tensions between the U.S. and Iran persist.
Investors remain cautious as U.S. President Donald Trump indicated military readiness if negotiations with Iran fail, keeping geopolitical risks elevated. The pair’s upward momentum suggests further upside potential for the USD against the JPY.