Dollar Surges as Fed Hawkishness Combines with Middle East Tensions
The USD/JPY currency pair has recovered towards 158 as a result of a hawkish Federal Reserve stance and energy-led inflation concerns, which have kept US yields close to multi-year highs.
This has led to increased safe-haven demand for the dollar, particularly in light of the ongoing tensions between the US and Iran. The pair rose to around 157.75 in Asia and maintained gains after the release of Bank of Japan minutes, despite the BoJ stating that financial conditions remain accommodative.
The yen showed little response to the July BoJ minutes, which reported that firms are passing through higher raw material costs, sustaining inflation. The pair 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.
The next resistance sits near the cycle high at 159.08, while supports are seen at 157.62, then 157.17, followed by 156.71 and 155.98.