FX.co ★ Yen Finds Support as Dollar Retreats

The Japanese yen strengthened past 157 per dollar on Thursday, extending gains from the previous session as the dollar retreated amid hopes for a reduction in hostilities in the Middle East and easing inflation concerns. Still, traders remain on alert for further escalation as the US-Israeli war on Iran entered its sixth day, with the US reportedly sinking an Iranian warship off the coast of Sri Lanka. Inflation worries also subsided after the Trump administration moved to reassure markets about the stability of commercial activity in the Gulf. Domestically, Bank of Japan Governor Kazuo Ueda warned that the Middle East conflict could significantly affect Japan’s economy, suggesting that interest rates are likely to remain on hold for an extended period. Meanwhile, Finance Minister Satsuki Katayama reiterated that currency market intervention remains an option to support the yen, stressing that authorities are monitoring the currency’s weakness “with a strong sense of urgency” and are coordinating closely with the United States.