USD/JPY slipped back on Thursday as the dollar remained under pressure from easing geopolitical risk and softer expectations for further Federal Reserve tightening. The pair fell toward the 158.70 area in Asian trading, moving back near this week’s low after failing to sustain the previous session’s modest rebound.
The US dollar stayed near its weakest level since early March against a basket of major currencies. That reflected growing optimism that tensions between the United States and Iran may be easing, with market participants increasingly focused on the prospect of a longer-lasting ceasefire and renewed diplomatic engagement. A more stable risk backdrop has reduced demand for the dollar’s traditional safe-haven appeal, leaving the greenback vulnerable against the yen.
Crude oil prices also remained relatively subdued, holding close to a three-week low. Lower oil prices have helped ease concerns about renewed inflation pressure in the United States, which in turn has dampened speculation that the Fed may need to remain restrictive for longer. That combination has reduced support for the dollar and contributed to the pullback in USD/JPY .
The Japanese yen has drawn some backing from expectations that policymakers could act to slow further weakness in the currency. At the same time, investors remain cautious about the risks surrounding the Strait of Hormuz. Any disruption to shipping routes could hit Japan hard, given its reliance on imported energy, and that concern is limiting the yen’s upside. As a result, the currency has not been able to extend gains decisively despite the softer dollar.
Broader price action suggests the pair is still trading within a range that has held for several weeks. That makes traders reluctant to call a deeper decline without stronger selling pressure. In the absence of major US economic releases, comments from Federal Reserve officials may provide the next meaningful direction for the dollar and USD/JPY .
