Yen Under Pressure Amid Hormuz Uncertainty and Hawkish BOJ Tone

The Japanese yen continued its decline against major and minor currencies on Monday, resuming losses after a brief rebound on Friday. The US dollar gained strength amid growing uncertainty over negotiations between the United States and Iran to reopen the Strait of Hormuz.

A surge in demand for the US currency pushed the USD/JPY exchange rate up 0.4% to ¥158.35, surpassing an opening level of ¥157.70. The yen had ended Friday 0.4% higher against the dollar, its first gain in four sessions, following bleak US employment data.

The Bank of Japan's policymakers have increasingly expressed concerns about rising inflation risks, leading to growing expectations for a Japanese interest-rate hike in September. Market pricing indicates an 85% probability of a 25-basis-point rate hike in September, up from 75% previously.