Forex

USD/JPY rises as Yen can’t benefit from risk aversion from the US-Iran conflict

Nikos Tzabouras Written by Nikos Tzabouras

USD/JPY Analysis

The military strike by the United States and Israel against Iran has sparked a global flight to safety, but the Yen once again fails to benefit from this shift, while the greenback attracts flows. The conflict sends oil prices soaring amid heightened supply risks, which could hurt the Japanese economy. Japan is a net importer of oil, with 94% of its crude imports coming from the Middle East. [1]

These headwinds may embolden PM Takaichi to pursue her expansive fiscal policies that have fuelled concerns over public finances and complicating the central bank's path. The BoJ is in a rate-hiking cycle but has adopted a cautious approach, and economic pressures from higher oil prices and tariffs could lead to an even more measured stance, potentially limiting further tightening. PM Takaichi expressed reluctance towards higher rates during her February meeting with BoJ governor Ueda, according to the Mainichi [2], while nominating two dovish board members, according to Reuters. [3]

These factors prevent the currency from benefiting from risk aversion, while the USDOLLAR attracts safe-haven demand. Oil-driven inflation could raise the bar for further Fed rate cuts and support the greenback. As a result, USD/JPY advances and has the chance push towards new 2026 highs.

On the other hand, the dollar continues to face headwinds from disruptive trade policies, rising debt, and concerns over Fed independence, feeding de-dollarisation and de-risking trends. Moreover, the Bank of Japan maintains its tightening bias, while Japanese officials have repeatedly warned of intervention to curb excessive volatility and Yen weakness. As a result, USD/JPY remains vulnerable to sub-EMA200 moves that could negate the upside bias.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.

As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.

References

1

Retrieved 02 Mar 2026 https://www.jetro.go.jp/biznews/2026/02/1963e21719ed7c58.html

2

Retrieved 02 Mar 2026 https://mainichi.jp/articles/20260224/k00/00m/020/128000c

3

Retrieved 03 May 2026 https://www.reuters.com/sustainability/boards-policy-regulation/japan-government-taps-academics-asada-sato-boj-board-2026-02-25/

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Learn More
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, Friedberg Direct, FXCM or its affiliates takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of Friedberg Direct and FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the Friedberg Direct's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.**

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. The spread figures are for informational purposes only. Friedberg Direct is not liable for errors, omissions or delays, or for actions relying on this information.

Order Execution Only

Order Execution Only

Regulatory Documents:
CIRO: Avoiding Fraud and Protecting Your Investments, How CIRO Protects Investors, CIRO Complaints Brochure, CIPF Brochure, CIPF Coverage Policy, CIRO Order Execution Only Bulletin, Conflict Disclosure Statement, Covid-19 and Cyber Security - Tips for Investors, Relationship Disclosure Information Document, Notice of Acknowledgment, Before You Begin Trading

The relationship between Friedberg Direct and FXCM was formed with the purpose to allow Canadian residents access to FXCM's suite of products, while maintaining their accounts with a regulated Canadian firm. All accounts are opened by and held with Friedberg Direct, a division of Friedberg Mercantile Group Ltd., a member of the Canadian Investment Regulatory Organization (CIRO). Friedberg customer accounts are protected by the Canadian Investor Protection Fund within specified limits. A brochure describing the nature and limits of coverage is available upon request or at www.cipf.ca.

* The percentage of our retail client accounts that were profitable in each of the previous most recent quarters was: Quarter 4, 2025: 41% | Quarter 3, 2025: 41% | Quarter 2, 2025: 34%. These figures are provided for transparency purposes only and do not constitute an indication of future performance or results.