- USD/JPY gains ground to near 159.35 in Friday’s Asian session.
- Trump said the next meeting between the US and Iran might take place over the weekend.
- Japan’s Katayama hinted at the JPY intervention after talks with the US counterpart.
The USD/JPY pair gathers strength around 159.35 during the Asian trading hours on Friday. The pair extends the rally for the third consecutive day amid uncertainty in the Middle East. However, heightening intervention warnings from Japanese officials might cap the upside for USD/JPY.
US President Donald Trump said on Thursday that Israel and Lebanon agreed to a 10-day ceasefire. The uncertainty in the Middle East remains high as the Lebanese army stated on Friday that it recorded multiple ceasefire violations by Israel after the truce went into effect at midnight local time on Friday. Rising tensions in the Middle East could boost the US Dollar (USD) against the Japanese Yen (JPY).
Traders will closely monitor a second round of negotiations between the US and Iran that could take place this weekend. Earlier on Thursday, Trump expressed optimism about the possibility that the US and Iran could clinch a permanent ceasefire ahead of its expiration next week.
Intervention fears from Japanese authorities could underpin the JPY and create a tailwind for the pair. Japan’s Finance Minister Satsuki Katayama said on Thursday that she’s held close discussions on foreign exchange issues with US Treasury Secretary Scott Bessent and that authorities are prepared for “bold” action if needed.
Earlier Friday, Bank of Japan (BoJ) Governor Kazuo Ueda said that a decision on how soon to raise interest rates must take into account the fact that the nation’s real interest rate is low. He added that Japan is facing rising inflation from a “negative supply shock,” which is more difficult to rein in with monetary policy than inflation driven by strong demand.
