Dollar Bounces Towards 158 as Fed Hawkishness and Middle East Tensions Support USD/JPY
USD/JPY has made a recovery towards 158 as the dollar gains strength due to hawkish Federal Reserve stance and energy-led inflation concerns. The pair rose to around 157.75 in Asia after dipping earlier in the week, but held its gains despite the Bank of Japan's accommodative monetary policy.
The US-Iran standoff has also contributed to safe-haven demand for the dollar, pushing it towards its strongest level since July 29th. The yen, however, showed little response to the BoJ minutes, which stated that financial conditions remain accommodative and firms are passing through higher raw material costs.
Markets remain cautious ahead of further Middle East developments and anticipate remarks from Federal Open Market Committee speakers later in North America. Technically, USD/JPY has moved back above the 23.6% Fibonacci retracement and held below the 50-period simple moving average on the four-hour chart, reinforcing a constructive bias above that level.