On Monday, both USD/JPY and NZD/USD currency pairs experienced notable movements as broad US Dollar (USD) weakness dominated trading, despite ongoing geopolitical tensions in the Middle East, particularly surrounding the Strait of Hormuz. USD/JPY traded in a wide intraday range, briefly spiking to a session high near 159.86 before pulling back to settle around 159.35, roughly flat on the day. Sellers emerged below the 160.00 handle, and the pair has been oscillating in a 200-pip band between 158.00 and 160.00 since early April, with 160.00 acting as a psychological cap for rallies [1]. Technical analysis shows USD/JPY holding in negative territory below the day's open at 159.73, with bearish momentum indicated by the Stochastic RSI retreating from overbought readings near 90 to the high-30s [1].
Meanwhile, NZD/USD rebounded, climbing back toward the 0.5880 region as USD weakness became the dominant market driver. Despite headlines of failed Iran-US talks and reports that President Donald Trump is sending the US Navy to close the Strait of Hormuz, the USD struggled to maintain its safe-haven status. Market flows shifted away from the dollar, lessening initial fear-based demand [2].
The broader market sentiment improved, with optimism that the Iran conflict may eventually reach a resolution, contributing to the softening of the US Dollar. Upcoming events include a key inflation print in the March Producer Price Index (PPI), expected to show headline PPI rising 1.2% MoM (up from 0.7% in February) and YoY forecast to jump to 4.6% from 3.4%. This data will reflect the impact of increased energy costs from the Iran conflict. Additionally, five Federal Reserve speeches and the upcoming April 28-29 FOMC meeting are expected to influence market direction [1].
In Japan, speculation is building around a potential rate increase from the Bank of Japan (BoJ) at its April 27-28 meeting, with a former BoJ executive director warning of inflation risks if the central bank does not act. Economy Minister Ryosei Akazawa suggested that BoJ monetary policy could be used to curb inflation through a stronger Yen, highlighting Japan's acute sensitivity to energy costs due to its reliance on crude oil imports [1].
Technical analysis for EUR/JPY, mentioned in the context of broader currency moves, shows the pair trading at 187.39 with a bullish bias, comfortably above key moving averages and with the Relative Strength Index in overbought territory near 80, suggesting strong upside momentum but vulnerability to profit-taking [2].
CONCLUSION
The US Dollar's weakness amid improving sentiment and persistent geopolitical tensions has led to notable moves in major currency pairs, with USD/JPY fading from highs and NZD/USD rebounding. Market participants are closely watching upcoming inflation data and central bank meetings for further direction. The overall takeaway is a cautious but optimistic shift away from the dollar as a safe haven, with technical and policy factors influencing short-term trading.