Japanese Yen falls as Hormuz tensions and policy concerns weigh

• USD/JPY trades higher as rising Oil prices and US-Iran tensions support the US Dollar while weighing on Yen.
• Trump restarts blockade of Hormuz, while Iran says the Strait is closed.
• Investors await US June CPI, with softer inflation potentially weakening the Greenback, while stronger price pressure could support a more restrictive Fed.

USD/JPY trades higher near 162.40 on Monday as the Japanese Yen (JPY) weakens amid escalating tensions between the United States (US) and Iran. The US Dollar (USD) remains supported by higher Oil prices and growing concerns that renewed energy pressure could keep global inflation elevated.

US President Donald Trump said the Strait of Hormuz would remain open “with or without Iran” and announced the reinstatement of a blockade targeting Iranian ships and customers. Trump also declared the US the “Guardian of the Hormuz Strait” and proposed charging 20% on cargo transported through the waterway to cover security costs.

Iran rejected Washington’s involvement, saying that the US would not be allowed to determine how the Strait is managed. Tehran also warned that any unauthorized US attempt to transit the waterway would be strongly confronted and that cooperation between regional countries and Washington could be considered an act of war.

On the US side, investors await the June Consumer Price Index (CPI) report. Headline inflation is expected to ease to 3.8% YoY from 4.2%, while the monthly reading is forecast to decline 0.1% after rising 0.5%. Core CPI is projected to remain unchanged at 2.9% YoY and 0.2% MoM. Softer-than-expected inflation could weaken the Greenback, while stronger price pressure, particularly amid rising energy costs, could reinforce expectations that the Federal Reserve (Fed) will maintain a restrictive policy stance.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 162.46, maintaining a constructive bullish bias as it holds above the 20-period Simple Moving Average (SMA) near 162.14 and the 100-period SMA near 161.89. The cluster of nearby supports reinforces the uptrend structure, while the Relative Strength Index (RSI) at about 58 stays in positive territory, hinting that upward momentum remains in place rather than stretched.

On the topside, immediate resistance appears at the horizontal barrier around 162.47, where a clear break would open the way for further gains. On the downside, initial support is seen at 162.41, followed by 162.33 and 162.26, with the 20-period SMA at 162.14 and the 100-period SMA at 161.89, offering deeper layers of demand if a pullback develops.

(The technical analysis of this story was written with the help of an AI tool. Know more.)