The USD/JPY currency pair consolidated near the 157.00 level on Monday, following a modest dip to the 156.60 region during the Asian session and a recovery from Friday's low of 155.50-155.45, which marked the lowest point since February 25 [1]. Renewed concerns over escalating tensions in the Middle East, particularly around the Strait of Hormuz, supported the safe-haven US Dollar. US President Donald Trump announced the initiation of 'Project Freedom,' a US operation to guide neutral ships out of the Strait of Hormuz, warning that any disruption would be met with force. In response, Ebrahim Azizi, head of Iran's National Security Commission, stated that US interference would be considered a ceasefire violation [1].
Minneapolis Federal Reserve President Neel Kashkari commented that a prolonged conflict with Iran could increase inflation risks and economic damage, and he raised the possibility of higher interest rates due to uncertainty surrounding the war. This stance further underpinned the US Dollar and lent support to the USD/JPY pair [1].
On the Japanese side, reports indicated that authorities likely intervened around May 1, spending approximately ¥5.4 trillion ($34.5 billion) to support the Yen. This intervention may be deterring traders from making fresh bearish bets against the Japanese currency, thereby capping further upside in the USD/JPY pair [1].
With no significant US economic data scheduled for release on Monday, the USD/JPY pair remains sensitive to developments in the Middle East. The current environment suggests caution, as analysts await strong follow-through buying before confirming a near-term bottom or a meaningful upside in spot prices [1].
CONCLUSION
USD/JPY is consolidating near 157.00, supported by Middle East tensions and hawkish Fed commentary, but capped by suspected Japanese intervention. The market remains cautious, awaiting further developments before committing to a clear direction.