FX.co ★ Japanese Yen Pressured by Iran War

The Japanese yen hovered around 159.5 per dollar on Monday, near its weakest level since July 2024, as the escalating conflict involving Iran and rising energy costs continued to pressure the currency. On Sunday, US President Donald Trump threatened strikes on Iran’s power plants and other civilian infrastructure starting Tuesday if the Strait of Hormuz is not reopened; Tehran rejected the ultimatum and has kept the waterway effectively closed. Market pricing now reflects more than a 70% probability of a Bank of Japan rate hike this month, with expectations for more than two additional increases by year-end. On Friday, the IMF also recommended that the BOJ continue gradually lifting interest rates toward a neutral level to restrain underlying inflation. Meanwhile, traders are closely watching for possible currency intervention by Tokyo following a series of strong warnings from Japanese officials.