On Thursday, the US Dollar (USD) regained ground against the Japanese Yen (JPY), climbing above the 159.00 level as geopolitical tensions in the Strait of Hormuz weighed on risk appetite among traders [1]. Iranian authorities threatened to shut traffic in the Red Sea and the Gulf of Oman if the US blockade of Iranian ports persists, dampening earlier optimism that had followed US President Trump's confirmation of ongoing negotiations with Iran [1]. Meanwhile, Israel's cabinet security member Galia Gamliel announced that Prime Minister Benjamin Netanyahu would meet Lebanese President Joseph Aoun, potentially paving the way for a resolution to the Middle East conflict [1].
In Japan, Finance Minister Satsuki Takayama stated that Japan and the US have agreed to strengthen communication on exchange rates after a meeting with US Treasury Secretary Scott Bessent. This was interpreted as a warning of Tokyo's commitment to address excessive JPY weakness, though the market reaction was marginal [1].
Separately, the AUD/JPY currency pair continued its strong upward momentum, reaching a fresh all-time high of 114.20 during Thursday's European session and trading around 114.10 [2]. Technical analysis indicates a bullish bias, with the pair trading above both the nine-period and 50-period Exponential Moving Averages (EMAs), and the 14-day Relative Strength Index (RSI) hovering just above 70.00, signaling overbought conditions [2]. The primary support for AUD/JPY is at the nine-day EMA of 112.76, with further downside risk if the pair breaks below the 50-day EMA at 110.61 [2].
The Australian Dollar (AUD) was the strongest against the New Zealand Dollar (NZD) on the day, while the JPY weakened slightly against most major currencies, including a 0.05% decline against the AUD and a 0.03% decline against the USD [2]. No forward-looking analyst opinions were provided in the sources, but the technical outlook for AUD/JPY remains bullish, albeit with caution due to overbought signals [2].
CONCLUSION
Geopolitical tensions in the Middle East have contributed to a weaker Japanese Yen, with the USD/JPY rising above 159.00 and AUD/JPY reaching record highs above 114.00. While Japanese authorities have signaled concern over excessive Yen weakness, market reactions have been limited. The technical outlook for AUD/JPY remains bullish, but overbought conditions suggest caution may be warranted.