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USD/JPY rises above 162 as Iran tensions boost USD safe-haven demand
The move is supported by a widening US-Japan rate gap, with the Fed expected to hold 3.50% to 3.75% in July versus the BoJ at 1.0%, plus worries about higher crude prices feeding inflation.
USD/JPY pushed higher in the Asian session, regaining the 162.00 level after a rebound from 161.30-161.25 late Friday, according to FXStreet. The article attributes the advance to a mix of geopolitical risk and interest-rate dynamics.
FXStreet links the dollar strength to fresh US-Iran tensions, including US strikes and Iran missile attacks on US military bases in the Gulf. The report says the situation raises uncertainty for global energy markets and notes Japan depends on the Strait of Hormuz for over 90% of its crude oil imports.
The outlet also points to the persistently wide US-Japan rate differential keeping the so-called carry trade active and weighing on the yen. It cites expectations that the Fed will keep its benchmark rate at 3.50% to 3.75% in July, while the Bank of Japan has normalized to 1.0%.
FXStreet adds that rising crude oil prices are reviving inflation concerns, supporting bets for at least one Fed rate hike in 2026, and that traders are watching for possible yen intervention by Japanese authorities. It says any near-term market cues Monday are expected to come from speeches by FOMC members, while later in the week attention will turn to US inflation data and Fed Chair Kevin Warsh’s congressional testimony.
Latest closeWTI crude $71.51 ▼0.8%|USD/JPY 161.67 ▼0.5%