The US Dollar (USD) advanced against major currencies during the Asian trading session on Thursday, driven by renewed geopolitical tensions in the Middle East following an exchange of attacks between the United States and Iran. The Japanese Yen (JPY) edged down against the USD, with the USD/JPY pair trading near 159.55, close to its four-week high of 159.65, as the Greenback outperformed its peers due to its safe-haven appeal in times of crisis [1]. The US Dollar Index (DXY), which tracks the USD against six major currencies, rose 0.3% to near 99.50 [1].
The Japanese Yen, while weaker against the USD, outperformed other major currencies, particularly the New Zealand Dollar, as shown by a 0.41% gain against the NZD [1]. The Yen's relative strength against other peers was supported by comments from Bank of Japan Governor Kazuo Ueda, who warned of second-round effects from 'high inflation expectations and rising wages' following the oil price shock, though he did not specify when the BoJ might raise interest rates [1].
Meanwhile, the USD/CAD pair extended its rally to 1.3870, marking a fresh high since April 13, as the USD's safe-haven status was reinforced by the ongoing Middle East crisis and speculation about future US Federal Reserve rate hikes in 2026 [2]. The move higher in USD/CAD persisted despite a recovery in crude oil prices, which typically supports the Canadian Dollar (CAD), indicating that the USD's strength was the dominant market force [2]. Technical analysis highlighted that the USD/CAD pair maintained a bullish bias, with potential for further gains if it breaks above the 78.6% Fibonacci retracement at 1.3875, targeting the recent swing high near 1.3963 [2].
Both articles emphasize that the market's focus is shifting to upcoming US Personal Consumption Expenditure Price Index (PCE) data for April, which could further influence currency movements [1]. The overall sentiment in the currency markets remains risk-averse, with the USD benefiting from its safe-haven status amid geopolitical uncertainty [1][2].
CONCLUSION
Escalating tensions between the US and Iran have driven investors toward the US Dollar, resulting in notable gains against both the Japanese Yen and Canadian Dollar. Despite some resilience in the Yen and a recovery in oil prices, the USD's safe-haven appeal remains the dominant market driver. Upcoming US PCE data is expected to be the next key catalyst for currency markets.