Yen Rises Amid BoJ Rate Hike Speculation, Intervention Signals

(RTTNews) - The Japanese yen strengthened against other major currencies in the European session on Monday, following a relatively hawkish tone from Bank of Japan Governor Kazuo Ueda in a parliamentary speech and warnings from top officials about possible actions against currency market speculation.

The BOJ Ueda said lawmakers that the central bank will keep a careful eye on changes in the value of the yen and how they affected inflation brought on by imports.

In order to strengthen the yen and counteract increased inflation from imports, particularly in light of rising energy prices, he hinted that the BoJ would likely raise interest rates in the upcoming months.

Japanese leaders' comments helped the yen. Atsushi Mimura, a top currency diplomat, stated on Monday that if yen speculation continues, authorities could have to take "decisive steps."

Traders remain cautious and concerned about the escalating war in the Middle East to the fifth week and its impact on energy prices, inflation, economic growth and monetary policy. Iran-backed Houthi militants entered the Middle East war, stoking fears of a protracted conflict.

Iran's military asserted taking full control of the Strait of Hormuz and warned of "harsh response" if any vessel attempts to pass through the channel.

US President Donald Trump claimed in a post on Truth Social that negotiations with Iran are "going very well," although Iranian state media has said Tehran "responded negatively" to a U.S. peace proposal. Tehran rebutted the U.S. president's fifteen-point ceasefire proposal and responded with conditions of its own.

Israel continued its military offensives against Iran despite diplomatic measures by the U.S. to contain the situation. Iranian steelmakers Khouzestan Steel and Mobarakeh Steel were hit by air strikes that damaged power infrastructure and storage facilities. In retaliation, Iran has vowed strikes targeting a list of steel plants in Kuwait, U.A.E., Israel, Saudi Arabia, Bahrain, and Qatar.

Crude oil prices skyrocketed after Iran shut down reports of peace talks for the ongoing conflict. West Texas Intermediate crude for May delivery was up $5.32 or 5.63 percent at $99.80 per barrel.

In the European trading today, the yen rose to a 6-day high of 183.74 against the euro, a 1-week high of 211.65 against the pound and nearly a 2-week high of 199.75 against the Swiss franc, from early lows of 184.16, 212.14 and 200.35, respectively. If the yen extends its uptrend, it is likely to find resistance around 181.00 against the euro, 210.00 against the pound and 198.00 against the franc.

Against the U.S. dollar, the yen edged up to 159.61 from a early low of 160.25. The yen is likely to find resistance around the 156.00 region.

Against the Australia and the New Zealand dollars, the yen climbed to more than 1-month highs of 109.50 and 91.51 from early lows of 109.82 and 91.84, respectively. On the upside, 107.00 against the aussie and 90.00 against the kiwi are seen as the next resistance levels for the yen.

The yen advanced to nearly a 2-week high of 114.81 against the Canadian dollar, from an early low of 115.29. The next possible resistance level for the yen is seen around the 112.00 region.

Looking ahead, the Bank of England is set to release U.K. mortgage approvals for February at 4:30 am ET in the European session. The number of mortgages approved in February is forecast to rise to 61,000 from 60,000 in January.

At 5:00 am ET, the European Commission publishes euro area economic sentiment survey results. Economists forecast the economic sentiment index to fall to 96.5 in March from 98.3 in February.

At 8:00 am ET, Germany's statistical office Destatis releases flash consumer and harmonized index for March.

In the New York session, U.S. Dallas Fed manufacturing index for March is due to be released.