Yen gains as Trump rules out Iran strikes before the midterms
The 10-year Treasury yield ended near 5.22% after President Trump said on Truth Social that the US won't attack Iran before the midterm elections. It had touched its highest since 2002 on Wednesday.
The US dollar strengthened against the Japanese yen due to President Trump's statement that the United States would not conduct military strikes against Iran before the midterm elections. The 10-year Treasury yield settled near 5.22% following the announcement, marking its highest level since 2002. Trump declared the negotiations with Tehran productive and maintained the US embargo, while Brent crude oil prices declined momentarily in response to the news.
The USD/JPY exchange rate fluctuated around 158.00, supported by the narrowing gap between US and Japanese interest rates, which diminishes the advantage of borrowing yen to hold dollars. The Fed's rate of 3.75%-4.00% is 2.5-2.75 percentage points higher than the Bank of Japan's 1.25%, and the lower US yields reduce the additional income from yen borrowing.
The St. Louis Federal Reserve President Musalem forecasted an increase in rates within the next six to nine months, causing the USD/JPY to recover a third of its drop. The Japanese yen, being a safe-haven asset, is expected to strengthen during periods of market instability. This article covers the events surrounding the USD/JPY exchange rate shift and the factors contributing to it, without providing any speculative insights or opinions.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
