Japanese Yen softens on US-Iran tensions, intervention fears grow

The USD/JPY pair trades in positive territory around 159.00 during the early European session on Monday. Renewed conflict between the United States (US) and Iran, and the closure of the Strait of Hormuz weigh on the Japanese Yen (JPY) against the US Dollar (USD). 

US President Donald Trump said on Sunday that US Marines had taken custody of a vessel that tried to get past the American blockade on Iranian ports, per the Guardian. Iran’s Foreign Ministry spokesman Esmail Baghaei said the US blockade of Iran’s ports and coastline is an act of aggression that violates the ceasefire. Signs of ongoing US-Iran tensions continue to support the Greenback in the near term. 

Bank of Japan (BoJ) Governor Kazuo Ueda on Friday avoided signaling an April rate hike, citing high economic uncertainty from the "negative supply shock" of the war. Markets now widely anticipate the Japanese central bank to hold rates steady until at least June 2026.

Nonetheless, the pair currently trades near a critical level, raising fears of intervention. Finance Minister Satsuki Katayama stated that Japan is watching markets with a "high sense of urgency" and is prepared to act against speculative moves.