USD/JPY remains around 160.80, marking the peak level since July 2024, which was attained on Thursday. Japan’s Minoru Kihara cautioned that the government stands prepared to react suitably to fluctuations in currency values at any moment. The US Dollar experienced a decline as safe-haven demand diminished, following a preliminary memorandum of understanding between the US and Iran aimed at concluding the conflict. USD/JPY experiences a slight decline following four consecutive days of increases, currently trading near 160.60 during the Asian trading session on Thursday. The USD/JPY pair surged to 160.80 the previous day, marking its highest level since July 2024 and significantly heightening speculation that Japanese authorities could soon intervene to support the struggling Yen.
In light of the swift depreciation of the currency, Japanese Chief Cabinet Secretary Minoru Kihara remarked at a Thursday conference that the government is “ready to respond appropriately to currency moves as needed at any time.” Kihara emphasised that officials are closely monitoring market developments and comprehensively evaluating their economic impact. Meanwhile, the USD/JPY pair surrendered some gains as the US Dollar weakened due to diminishing risk aversion. This shift followed a report confirming that US President Donald Trump and Iranian President Masoud Pezeshkian have signed a preliminary memorandum of understanding aimed at ending the US-Israel war on Iran.
However, the Greenback’s downside may be constrained, with the potential to recover against major counterparts as the likelihood of a Federal Reserve interest rate increase later this year escalates. According to the Fed’s June Summary of Economic Projections, half of the FOMC members continue to anticipate at least one rate hike in 2026. Despite recent economic disruptions associated with the conflict in Iran, a robust US labour market and ongoing underlying inflation persist in exerting pressure for monetary tightening.