USD/JPY plunges to near 145.00 as US Dollar underperforms on Israel-Iran truce
- USD/JPY plummets to near 145.00 as the Israel-Iran ceasefire has diminished the safe-haven demand.
- US President Trump urged Iran and Israel not to violate the ceasefire agreement.
- The Japanese Yen gains sharply as the Oil price bleeds after the Israel-Iran truce.
The USD/JPY pair faces a sharp sell-off and slides to near 145.00 on Tuesday. The pair dives significantly as the US Dollar (USD) underperforms its peers after a ceasefire between Israel and Iran.
Easing geopolitical tensions diminish demand for safe-haven assets, such as the US Dollar. During European trading hours, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 98.00.
The demand for the Japanese Yen (JPY) should have weakened too, given its safe-haven status. However, the Asian-Pacific currency is outperforming its peers, except antipodeans, due to the decline in oil prices.
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.67% | -0.74% | -0.16% | -0.86% | -0.98% | -0.14% | |
| EUR | 0.29% | -0.41% | -0.45% | 0.13% | -0.56% | -1.12% | 0.16% | |
| GBP | 0.67% | 0.41% | -0.06% | 0.54% | -0.15% | -0.72% | 0.42% | |
| JPY | 0.74% | 0.45% | 0.06% | 0.59% | -0.16% | -0.28% | 0.47% | |
| CAD | 0.16% | -0.13% | -0.54% | -0.59% | -0.70% | -1.25% | -0.12% | |
| AUD | 0.86% | 0.56% | 0.15% | 0.16% | 0.70% | -0.56% | 0.56% | |
| NZD | 0.98% | 1.12% | 0.72% | 0.28% | 1.25% | 0.56% | 1.14% | |
| CHF | 0.14% | -0.16% | -0.42% | -0.47% | 0.12% | -0.56% | -1.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
A lower oil price bodes well for the currencies of nations that fulfill their energy requirements through imports.
During the European session, United States (US) President Donald Trump confirmed a ceasefire between Israel and Iran, and urged them not to violate the same in a post on Truth.Social. “The ceasefire is now in effect. Please do not violate it!" Trump wrote.
Meanwhile, a few Federal Reserve (Fed) officials have argued in favor of resuming the monetary expansion cycle, which was paused in the December policy meeting. On Monday, Fed Governor Michelle Bowman showed openness to cut interest rates in the July meeting and warned of downside risks to the labor market.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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