Anna 
In recent trading sessions, the USD/JPY pair has seen a reversal in its downward trend, largely attributed to comments from a senior Iranian official indicating no immediate plans for retaliation against Israel’s missile strike on Iran, as reported by Reuters. This development has contributed to a decrease in the likelihood of escalating tensions in the Middle East, leading to a stabilization of the pair around 154.50 during the early European session on Friday.
The strengthening of the Japanese Yen (JPY) was observed as risk aversion sentiment permeated financial markets, spurred by reports from ABC News of Israeli missiles striking a site in Iran. Additionally, marginal support for the JPY was derived from Japan’s inflation data release, with the National Consumer Price Index (CPI) for March showing a 2.7% year-over-year increase, slightly lower than February’s 2.8% rise. This index serves as a measure of the price fluctuations of goods and services purchased by households.
Notably, hawkish remarks from Bank of Japan’s (BoJ) Governor Kazuo Ueda on Thursday further bolstered the JPY. Ueda hinted at the possibility of interest rate hikes should significant declines in the Yen substantially boost inflation, as reported by Reuters.
Conversely, on the US front, Federal Reserve (Fed) officials conveyed hawkish sentiments on Thursday, leading to a surge in US Treasury yields and the US Dollar (USD). This upward movement in the USD consequently limited the losses of the USD/JPY pair.
Market participants are eagerly awaiting upcoming speeches from Federal Reserve officials for further insights into the economic outlook. Atlanta Fed President Raphael Bostic is scheduled to discuss the US economic outlook at the University of Miami, Florida, while Chicago Fed President Austan Goolsbee will participate in a moderated Q&A session at the Association for Business Journalists 2024 SABEW Annual Conference in Chicago.
