The Japanese Yen (JPY) edged higher against the US Dollar (USD) during the Asian session on Friday, with the USD/JPY pair trading just above the mid-159.00s, down 0.15% for the day. This move comes as the Yen approached the 160.00 threshold, a level previously referenced by Japanese authorities for potential intervention, and as the USD softened following US President Donald Trump's decision to delay strikes on Iran’s energy infrastructure and extend the Strait of Hormuz reopening deadline to April 6 [1][3][4]. Despite this, concerns about the impact of elevated energy prices on Japan's trade balance and economic outlook may limit further Yen appreciation, while the repricing of Federal Reserve (Fed) rate expectations continues to support USD bulls and cap USD/JPY losses [1].
The US Dollar Index (DXY) slipped below 100.00, trading around 99.90, as risk aversion decreased after Trump's announcement. However, the Wall Street Journal reported that Iran denied requesting the pause, highlighting fragile diplomacy and low odds of a near-term ceasefire [4]. The downside for the USD may be limited by rising inflation concerns and the fading likelihood of further Fed rate cuts, with market participants increasing bets on a potential rate hike by year-end. Fed officials noted that while higher energy prices could have a modest impact on inflation, a sustained shock could be more significant, reinforcing the need for the Fed to closely monitor economic conditions [4].
Gold (XAU/USD) gained positive traction, reversing part of the previous day's fall to the $4,350 area, as the USD weakened on Trump's Iran strike delay. However, expectations of higher global interest rates and a hawkish Fed outlook are capping gold's upside, with traders fully pricing out further US rate cuts and increasing bets for a hike by year-end. Technical analysis indicates a bearish setup for gold, with momentum under pressure and the MACD in negative territory, suggesting sellers remain in control [3].
In the currency markets, EUR/JPY traded around 184.10, extending losses for a second session but maintaining a mildly bullish near-term bias as it held above key moving averages. The cross remains close to the upper boundary of an ascending triangle, with a breakout above 184.60 potentially leading to a test of the all-time high at 186.88. On the downside, support levels are seen at 183.92 and 183.34, with a break below 182.80 exposing the three-month low of 180.81 [2].
US Initial Jobless Claims were in line with expectations at 210K, providing little new direction, while market attention turns to upcoming University of Michigan consumer sentiment and inflation expectations data [4].
CONCLUSION
The Japanese Yen strengthened on intervention fears as the USD softened following Trump's delay of strikes on Iran, but further gains may be limited by energy price concerns and a hawkish Fed outlook. The US Dollar Index and gold both reacted to shifting geopolitical and monetary policy expectations, while EUR/JPY maintained a bullish technical posture. Overall, markets remain sensitive to geopolitical developments and central bank policy signals.