Yen Climbs as Dollar Softens, Tokyo in Focus

Key Moments

USD/JPY moved below the 162.00 level for a second consecutive session as traders stayed alert for potential Japanese government intervention.
The US Dollar Index fell to a new weekly low after less-hawkish FOMC Minutes showed a split among policymakers on the path of interest rates.
Geopolitical tensions involving US-Iran military actions and energy supply concerns in the Strait of Hormuz continued to influence risk sentiment and currency flows.

Yen Gains as Intervention Concerns Resurface

The USD/JPY pair faced strong selling pressure during the Asian session on Friday, pushing the exchange rate below the 162.00 mark. Market participants remained wary of the risk that Japanese authorities might step in to support the Japanese Yen, which encouraged traders to reduce long USD/JPY positions for a second day in a row.

Additional downside in the pair was driven by continued weakness in the US Dollar, as investors extended selling of the Greenback and added to the intraday decline in spot prices.

Softer Dollar Follows Divided FOMC Minutes

The US Dollar Index (DXY), which tracks the Greenback against a basket of major currencies, slipped to a fresh weekly low after the release of the latest FOMC Minutes. The minutes indicated that Federal Reserve policymakers were not unified on the future direction of interest rates, which tempered expectations for a more hawkish policy stance.

Even so, markets continued to assign roughly a 65% probability that the Federal Reserve will lift borrowing costs in September. This lingering expectation, together with ongoing geopolitical uncertainty, was seen as a factor that could curb a deeper pullback in the safe-haven Dollar and help provide some underlying support for USD/JPY.

Escalating US-Iran Tensions Underpin Safe-Haven Demand

Geopolitical risks remained elevated following renewed military activity involving the United States and Iran. Earlier in the week, US forces launched a new series of strikes against Iran in response to Iranian attacks on commercial vessels in the Strait of Hormuz. Iran, in turn, fired back by targeting American allies and striking US military facilities in Bahrain and Kuwait.

Tensions were further amplified when US President Donald Trump stated on Wednesday that the memorandum of understanding with Iran intended to end the Middle East conflict was no longer in effect. These developments kept geopolitical risk firmly in focus and lent support to the US Dollar’s safe-haven appeal, even as it weakened on monetary policy repricing.

Japan’s Energy Exposure and Rate Gap Temper Yen Upside

Investors also continued to weigh economic risks from potential energy supply disruptions in the Strait of Hormuz. Japan is heavily exposed to such shocks, relying on the Middle East for more than 90% of its crude oil imports, which heightens concern about any prolonged interruption in flows through the key shipping route.

At the same time, borrowing costs in Japan remain well below those in major Western economies, including the United States. This wide interest rate differential can discourage aggressive buying of the Yen and may limit the extent of further USD/JPY downside. As a result, some market participants remained cautious about declaring that the pair has established a medium-term top and were hesitant to position decisively for additional declines.

US Dollar Performance Against Major Currencies

The following table summarizes the percentage change of the US Dollar (USD) against major currencies today. According to the data, the US Dollar showed the strongest performance versus the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.13%	-0.16%	-0.39%	-0.09%	-0.06%	-0.38%	-0.24%
EUR	0.13%		-0.03%	-0.22%	0.04%	0.06%	-0.25%	-0.11%
GBP	0.16%	0.03%		-0.20%	0.07%	0.08%	-0.22%	-0.10%
JPY	0.39%	0.22%	0.20%		0.27%	0.30%	-0.04%	0.09%
CAD	0.09%	-0.04%	-0.07%	-0.27%		0.02%	-0.30%	-0.17%
AUD	0.06%	-0.06%	-0.08%	-0.30%	-0.02%		-0.32%	-0.21%
NZD	0.38%	0.25%	0.22%	0.04%	0.30%	0.32%		0.12%
CHF	0.24%	0.11%	0.10%	-0.09%	0.17%	0.21%	-0.12%

The heat map reflects the percentage changes among the major currencies. The base currency is taken from the left-hand column and the quote currency from the top row. For example, selecting the US Dollar as the base currency and moving horizontally to the Japanese Yen cell shows the percentage move in USD (base)/JPY (quote).