FX.co ★ Japanese Yen Holds Advance

The Japanese yen hovered around 158.9 per dollar on Wednesday, paring some gains from the previous session. The currency had strengthened earlier, supported by lower oil prices and a softer US dollar amid growing optimism over a diplomatic resolution to the Middle East conflict. The US and Iran are reportedly preparing for a second round of peace talks before the current two-week ceasefire expires, although tensions in the Strait of Hormuz continue to elevate global energy risks. Japan’s currency remains highly sensitive to supply shocks linked to the Iran conflict, given the country’s heavy dependence on Middle Eastern oil imports. The yen also drew support from speculation about possible official intervention, as it recently neared the closely watched 160-per-dollar level—an exchange rate that has previously prompted Japanese authorities to act to stabilize the currency. Meanwhile, BOJ Governor Kazuo Ueda cautioned that policymakers must remain vigilant to the economic fallout from the conflict, noting that higher oil prices could dampen Japan’s growth outlook.