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USDJPY nears 160 as higher oil prices and geopolitics support the dollar

July US inflation cooled, but escalating tensions and Brent above $90 a barrel have boosted USDJPY toward 160 and increased the odds of further Japanese currency intervention.

Reported · Written up by our desk · Major Pairs

ActionForex says the US dollar has strengthened even as inflation data cooled and the market dialed back the odds of Fed rate hikes. It cites July consumer prices rising 3.4%, down from 3.5% in June, and core inflation easing to 2.5% from 2.6% year over year.

The outlet links the dollar’s resilience to geopolitics that have kept investors focused on energy prices. It notes that a US Iran agreement to reopen the Strait of Hormuz initially helped Brent fall back toward pre conflict levels, but tensions later escalated and Brent rallied to above $90 per barrel, with knock on pressure from rising petrol prices and higher inflation risks.

Those factors have, in turn, pushed USDJPY toward 160, raising expectations for another round of currency interventions. ActionForex also points to market speculation around Japan’s policy stance, including a tension between calls for faster monetary tightening and Japan’s desire to keep interest rates low, with the report saying rumors were strong enough to prompt a response from Japan’s cabinet.

The piece adds that the case for policy tightening is supported by price pressures beyond consumer inflation, including July producer prices up 7.2% year over year, near a more than three year high, and argues that sustaining current USDJPY levels likely requires the Bank of Japan to change course.

Latest closeBrent $88.46 ▼0.5%

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