- AUD/JPY may further struggle as the Australian Dollar faces challenges due to increased risk aversion.
- US Vice President JD Vance confirmed US–Iran talks in Islamabad ended without a deal after 21 hours of negotiations.
- Japan’s 10-year bond yield rose to 2.47% as oil surged after US–Iran talks collapsed.
AUD/JPY pares its daily losses but remains in the negative territory, trading around 112.40 during the Asian hours on Monday. The currency cross faced challenges as the Australian Dollar (AUD) weakened as risk aversion increased after US Vice President JD Vance said Washington and Tehran failed to reach a peace agreement in Islamabad following 21 hours of talks.
US President Donald Trump said Washington would begin blockading all ships entering or leaving the Strait of Hormuz, while US Central Command (CENTCOM) confirmed operations targeting maritime traffic to and from Iranian ports from 10 AM ET (14:00 GMT) Monday.
Rising energy costs have also fueled inflation concerns, with Australia’s monthly inflation gauge hitting a record 1.3% in March, signaling renewed price pressures since late 2025. The Reserve Bank of Australia (RBA) has already raised rates by 50 basis points to 4.10%, and markets now expect another hike in May.
The downside of the EUR/JPY cross could be restrained as the Japanese Yen (JPY) struggles with stagflation concerns amid rising oil prices. Rising energy costs fueled expectations of a near-term Bank of Japan (BoJ) rate hike.
The BoJ is set to hold its next policy decision on April 28, where officials will evaluate whether elevated global energy and commodity prices justify tightening. Japan’s 10-year government bond yield rose to around 2.47% on Monday as oil prices surged following the breakdown of US–Iran peace talks.
The Sakura Report showed board members balancing upside inflation risks against downside growth risks following the April 6 branch managers’ meeting. All nine regions maintained that their economies were either “recovering moderately,” “picking up,” or “picking up moderately.”
