The Japanese Yen (JPY) continued to weaken against major currencies, with the USD/JPY pair trading near the 160.00 level, as Japanese Government Bond (JGB) yields reached multi-decade highs and the Bank of Japan (BoJ) maintained a hiking bias [2]. The Pound Sterling (GBP) also advanced against the Yen, with GBP/JPY trading higher and testing resistance at 211.45, supported by moderate market optimism following news of a proposed peace plan to end the war in Iran [1]. This plan, reportedly received by both Iran and the US, outlines a 45-day ceasefire that could immediately end hostilities and reopen the Strait of Hormuz, prompting investors to shift away from safe-haven assets like the US Dollar in favor of riskier assets such as the Pound [1].
Technical analysis indicates that GBP/JPY remains in a mildly bullish trend, having bounced from 209.64 in late March, with technical indicators such as the RSI stabilizing above 50 and the MACD line in positive territory [1]. Price action suggests a potential move beyond the 211.45 resistance area, targeting the 212.30–212.55 zone, which includes the 78.2% Fibonacci retracement of the late-March sell-off [1]. Immediate support is noted at 210.35 and 209.64 [1]. On the day, the Pound was the strongest against the US Dollar, gaining 0.31%, and rose 0.19% against the Yen [1].
On the Japanese side, the yield on 10-year JGBs rose 2.5 basis points to 2.41%, marking a 28-year high, while the 40-year yield increased 7 basis points to 3.92% [2]. The BoJ, despite warning of economic risks from Middle East tensions—including higher transport and energy costs and supply chain disruptions—has maintained its hiking bias, contributing to ongoing bond selling and further Yen weakness [2]. Japan's leadership is reportedly seeking talks with Iran to secure energy supplies, and Minister for Economic and Fiscal Policy Minoru Kiuchi acknowledged in parliament that the weak Yen has both positive and negative impacts on Japan's economy [2].
Market participants remain cautious about placing significant Yen shorts, as USD/JPY's proximity to 160.00 is seen as a potential trigger for intervention by Japanese authorities to prevent excessive Yen depreciation, according to market speculation [1].
CONCLUSION
The Japanese Yen's continued weakness is driven by rising domestic yields and the BoJ's hawkish stance, while geopolitical developments in the Middle East have shifted market sentiment toward riskier assets like the Pound. Both GBP/JPY and USD/JPY are trading near key resistance levels, with market participants closely watching for potential intervention or further escalation in yields. The situation remains fluid, with energy security and central bank policy as critical factors.