USD/JPY struggles for direction on Thursday as fears of intervention by Japanese authorities cap upside, even as the US Dollar (USD) strengthens amid renewed hostilities between the United States and Iran.
At the time of writing, the pair is trading around 160.50, a level that previously triggered intervention from Tokyo in late April
Japanese authorities have repeatedly signaled their readiness to take decisive action against excessive and disorderly currency moves. On the geopolitical front, US President Donald Trump warned of further strikes against Iran as tensions escalated earlier this week after Tehran downed a US Apache helicopter near the Strait of Hormuz. However, diplomatic efforts remain underway.
Reuters reported on Thursday, citing Iranian and Western sources, that Tehran and Washington are still exchanging messages over the details of a memorandum of understanding, including mechanisms for the release of frozen Iranian funds. The latest flare-up has cast doubt on the durability of the ceasefire announced in April and dented hopes for a near-term peace deal. This keeps geopolitical risks in play and supports safe-haven demand for the US Dollar.