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Japanese Yen softens on renewed US-Iran tensions, Japan flags intervention risk

  • USD/JPY trades with mild gains around 162.40 in Friday’s Asian session. 
  • The US is carrying out major strikes on Iran for the sixth consecutive day, lifting the US Dollar. 
  • Japan’s Katayama said authorities are ready to act on currency moves whenever necessary. 

The USD/JPY pair posts modest gains near 162.40 during the Asian trading hours on Friday. The US Dollar (USD) strengthens against the Japanese Yen (JPY) as the United States (US) launches a new wave of strikes against Iran for a sixth night in a row. Traders will keep an eye on the preliminary reading of the Michigan Consumer Sentiment Index for July later on Friday. 

The US Central Command (CENTCOM) said on Thursday that it launched a new wave of strikes against Iran for a sixth night in a row, per the BBC. The US military said that the attacks were intended to “further degrade Iranian military capabilities” before saying it had boarded a vessel as part of its blockade of the Strait of Hormuz.

Iran’s state media reported US missiles struck close to the island of Qeshm, near the strait, as well as in Bandar Abbas and Bushehr, the site of a nuclear power plant. Earlier this week, US President Donald Trump threatened to strike Iran’s bridges and power plants if the country did not return to talks. Renewed Hormuz hostilities could boost the Greenback against the JPY in the near term. 

Kyodo News Agency reported on Friday that the Japanese government will state in its economic blueprint that decisions on specific monetary policy tools should be left to the Bank of Japan (BoJ). A final version of the blueprint will also state that the government will reach a decision “by early August” on whether and by how much Japan will cut 8% consumption tax levied on food.

Traders remain on alert for possible intervention from Japanese officials. Japan’s Finance Minister Satsuki Katayama said on Friday that the authorities are ready to act on currency moves whenever necessary. 

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Chinese Yuan loses as safe-haven demand lifts US Dollar

  • USD/CNH climbs as rising Middle East tensions drive investors toward the US Dollar as a safe-haven asset.
  • Iran told Houthi rebels to block the Red Sea oil route if the US attacks Iranian infrastructure.
  • Economists and an adviser say China can stabilize growth by fast-tracking already-budgeted national infrastructure projects this year.

USD/CNH gains ground for the second successive day, trading around 6.7760 during the Asian hours on Friday. The pair appreciates as the US Dollar (USD) receives support from escalating developments surrounding conflicts in the Middle East.

Reuters reported on Thursday that Iran has instructed Yemen’s Houthi militia to stand ready to close the critical Red Sea oil route if the United States strikes Iranian power infrastructure, presenting a potent new threat to global energy supplies. Amplifying these concerns, the Tasnim news agency reported explosions in Bandar Abbas, Qeshm, and Ahvaz, while very loud explosions were also heard in Kuwait and as far away as Basra.

These geopolitical flare-ups follow threats made earlier this week by US President Donald Trump, who stated the US would strike Iran’s bridges and power plants next week if the country does not return to the negotiating table. Ultimately, these signs of escalating tensions in the Middle East could boost safe-haven currencies like the US Dollar, potentially creating a strong tailwind for the USD/CNH pair in the near term.

China can stabilize its economic growth this year by fast-tracking already-budgeted national infrastructure projects, according to economists and a government adviser. This approach reduces the likelihood of large-scale fiscal stimulus. The strategy allows Beijing to counter an unexpected, broad decline in investment—which recent data showed has dragged down growth—while maintaining strict control over local government spending, per Reuters.

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EUR/JPY Price Remains below ascending triangle top near 186.00

  • EUR/JPY may find immediate resistance at the ascending triangle top near 186.00.
  • The 14-day Relative Strength Index is at 55.17, indicating steady, sustainable bullish momentum.
  • The currency cross could find the initial support at the nine-day EMA at 185.42.

EUR/JPY extends its losses for the second consecutive day, trading around 185.70 during the Asian hours on Friday. The currency cross is holding above both the nine-period and 50-period Exponential Moving Averages (EMAs), which reinforces a constructive near-term bias. The 14-day Relative Strength Index (RSI) sits at 55.17, neutral-to-positive territory, suggesting steady bullish momentum rather than an overstretched rally.

The daily chart technical analysis shows the EUR/JPY cross is pressing against ascending triangle resistance near 186.00. This flat ceiling, combined with shallower dips, signals aggressive buying pressure. Because bulls are consistently absorbing the supply at this level, momentum is heavily building for an imminent upside breakout. A decisive daily close above this upper boundary typically triggers a powerful bullish continuation, which could expose the all-time high of 187.95, which was recorded on April 17.

On the downside, primary support lies at the nine-day EMA at 185.42, followed by the 50-day EMA at 185.09. Further declines would put downward pressure on the EUR/JPY cross to test the ascending triangle’s lower boundary around 184.80. A break below the triangle would expose the four-month low of 181.87, recorded on March 16, and the six-month low of 180.81.

EUR/JPY: Daily Chart

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.02%0.06%0.00%-0.04%0.12%0.04%0.00%
EUR-0.02%0.06%-0.04%-0.09%0.13%0.03%-0.02%
GBP-0.06%-0.06%-0.09%-0.14%0.06%-0.02%-0.08%
JPY0.00%0.04%0.09%-0.03%0.15%0.04%0.01%
CAD0.04%0.09%0.14%0.03%0.19%0.09%0.05%
AUD-0.12%-0.13%-0.06%-0.15%-0.19%-0.11%-0.14%
NZD-0.04%-0.03%0.02%-0.04%-0.09%0.11%-0.04%
CHF-0.00%0.02%0.08%-0.01%-0.05%0.14%0.04%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

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Trade of The Day – GBP/AUD

Facts: GBPAUD is trading above the 100-period moving average from D1 interval The pair broke above the resistance at 1.9190 The pair invalidated 1:1 structure

Recommendation: Trade: Long position on GBPAUD at market price Target: 1.9735, 2.0000 Stop: 1.9140

Opinion: GBPAUD has been trading in a downward trend since April 2025, but the pair may be experiencing a trend reversal. Looking at the pair at the D1 interval, one can see that the price broke above the upper limit of the 1:1 structure which, according to the Overbalance strategy, may herald a resumption of an upward trend. As long as the price sits above 1.9190, the further upward move is the base case scenario. We recommend going long GBPAUD at market price with two targets: 1.9735 and 2.0000. We also recommend placing a stop loss at 1.9140. Source: xStation5

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GBPUSD up 0.1% after better-than-expected UK GDP data

08:00 AM, United Kingdom, monthly GDP report:

  • UK GDP Estimate YoY Actual 1.3% (Forecast 1.2%, Previous 1.2%)
  • UK GDP Estimate MoM Actual 0.1% (Forecast 0%, Previous -0.1%)
  • UK Manufacturing Production MoM Actual 0.1% (Forecast -0.2%, Previous 0.4%)

The UK economy continues its steady, post-recession expansion, marking its sixth consecutive month of rolling three-month growth. While the broader trend remains highly positive, momentum slowed slightly heading into the summer, influenced by global supply chain disruptions stemming from the geopolitical conflict in Iran. Figure 1: Contributions to three-month GDP growth, UK, May 2025 to May 2026

Source: Gross domestic product (GDP) monthly estimate from the Office for National Statistics Key Performance & Sector Breakdown

  • Overall GDP: Grew 0.7% in the three months to May 2026 (down slightly from 0.8% in April), but managed a modest 0.1% tick-up in the month of May itself.
  • Services (The Growth Engine) : Grew 0.7% in the three months to May. Growth was powered by Information & Communication (up 2.5%) and professional services—specifically scientific R&D (up 5.1% in May), driven by medical sciences.
  • Production & Manufacturing: Rose 0.1% over the three months. Manufacturing was the standout sub-sector (up 1.6%), led by pharmaceuticals. However, this was weighed down by sharp declines in energy and water utilities.
  • Construction: Grew 1.6% over the three months, buoyed by private commercial projects. However, it contracted 0.8% in May, dragged down by a 5% drop in private housing repair and maintenance.

The pound reacted positively to the reading, though it wasn’t able to break out of the current range between 1,3520 and 1,3550. GBPUSD is tradining closely to the 10-hour exponential moving average (EMA10 on an H1 chart; yellow), slowing down after dynamic gains thruought the yesterday’s session.

Source: xStation5

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AUD/JPY Price Declines below 113.50, while maintaining bullish near‑term structure

  • AUD/JPY softens to near 113.45 in Thursday’s early European session. 
  • The cross maintains a constructive outlook, with bullish RSI momentum. 
  • The immediate resistance level is seen at 113.70; the initial support level to watch is 112.65. 

The AUD/JPY cross trades in negative territory around 113.45 during the early European trading hours on Thursday. Verbal intervention from Japanese authorities provides some support to the Japanese Yen (JPY) against the Australian Dollar (AUD). 

Japan’s Finance Minister Satsuki Katayama said on Thursday that the authorities are ready to take appropriate action on currency anytime as needed. She added that the officials will track market trends and economic data to ensure fiscal sustainability.

Senior officials from the Bank of Japan (BoJ) noted that a delay in stimulus adjustment amid high inflation risk could trigger an economic downturn. However, a Reuters survey showed earlier Thursday that nearly half of Japanese firms are experiencing negative business impact from the BoJ’s interest rate hikes, with higher borrowing costs hurting bottom lines and discouraging capital investment. 

Chart Analysis AUD/JPY

Technical Analysis:

In the daily chart, AUD/JPY holds a bullish near-term bias as price remains above the 100-day Simple Moving Average (SMA) and the Bollinger Bands 20-period middle band, suggesting the broader uptrend is still supported despite recent consolidation. The latest Relative Strength Index (14) reading around 57 keeps momentum on the constructive side, hinting that buyers retain control as long as the pair stays comfortably above the lower Bollinger band at 111.10.

On the topside, initial resistance emerges at the Bollinger upper band around 113.70, where a sustained break would open the door to the May 13 high of 114.74.

On the downside, the first layer of support is seen at the 100-day SMA at 112.65, followed by the Bollinger middle band near 112.40, while a deeper pullback towards the lower band at 111.10 would be needed to seriously challenge the prevailing bullish structure.

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Euro consolidates near four-week top, above mid-1.1400s amid mixed Fed cues, geopolitics

  • EUR/USD struggles to attract follow-through buying amid mixed fundamental cues.
  • Receding Fed rate hike bets keep USD bulls on the defensive and support spot prices.
  • Escalating US-Iran tensions and inflation fears help limit USD losses, capping the pair.

The EUR/USD pair holds steady above the 1.1450 level during the Asian session on Thursday and consolidates its strong gains registered over the past two days, to the highest level since June 18.

The US Dollar (USD) struggles to attract any meaningful buyers and languishes near a four-week low, touched on Wednesday following the release of the US Producer Price Index (PPI). In fact, the US Bureau of Labor Statistics (BLS) reported that the PPI unexpectedly fell 0.3% in June. This comes on top of a soft US Consumer Price Index (CPI) report on Tuesday and further prompts traders to trim their bets for an immediate rate hike by the US Federal Reserve (Fed). The outlook, in turn, keeps USD bulls on the defensive, which is seen as a key factor acting as a tailwind for the EUR/USD pair.

Meanwhile, the US-Iran conflict has intensified since the beginning of this week, with US forces launching a fresh round of airstrikes targeting Iranian missile and drone infrastructure on Wednesday. Tehran, on the other hand, has responded with retaliatory drone and missile attacks on US-linked military facilities across the region. Adding to this, the US naval blockade of Iranian ports and the closure of the Strait of Hormuz support elevated crude oil prices. This fuels concerns about energy-driven inflation and revives hawkish Fed expectations, limiting USD losses and capping the EUR/USD pair.

Traders now look forward to the US economic docket – featuring monthly Retail Sales, the Philly Fed Manufacturing Index, and the usual Weekly Initial Jobless Claims. This, along with speeches from influential FOMC members, would drive the USD demand and provide some impetus to the EUR/USD pair. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution before placing fresh bullish bets and positioning for any further appreciating move.

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South Korean Won edges up against US Dollar as BoK hikes interest rates

  • The South Korean Won ticks up against the US Dollar as BoK raises interest rates for the first time in three-and-a-half years.
  • The BoK was expected to hike policy rates to counter persistent inflationary pressures.
  • Traders have dialed down the Fed’s interest rate hike expectations as US inflation cools down.

The South Korean Won (KRW) reflects broader strength against the US Dollar (USD) as the Bank of Korea (BoK) delivers its first interest rate hike in three-and-a-half years, raising rates by 25 basis points (bps) to 2.75%. The USD/KRW pair gives back slight early gains and ticks down to near 1,484.68 in the Asian trade on Thursday.

The pair will likely remain firm as the BoK has kept the door open for further interest rate hikes, in an attempt to stabilize a slumping KRW and tame persistent price pressures. “We will respond until inflation stabilizes to BoK’s target level,” BoK Governor Hyun-Song Shin said in a statement. Shin added, “Demand side price pressure may need careful monitoring as it can turn into stronger inflationary pressure if robust increase in Gross Domestic Income (GDI) sustained.”

The Asian currency has been outperforming the US Dollar for over two weeks, as market participants had already priced in an interest rate hike by the BoK.

Meanwhile, the US Dollar strives to regain ground after a sharp sell-off in the last two trading days. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally higher to near 100.50.

The USD Index fell sharply in the past two trading days as soft United States (US) inflation figures on both the retail and the wholesale level have forced traders to reconsider Federal Reserve (Fed) interest rate expectations.

According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in the July meeting have dropped significantly to 10.2% from 31% recorded a week ago.