Global currency markets entered the close of the week with the U.S. dollar on track to record its first weekly rise in three weeks, driven by renewed concern that negotiations between the United States and Iran are not progressing and by continuing ambiguity about the reopening of a key shipping route.
Lebanon and Israel agreed to extend a ceasefire for three weeks ahead of its scheduled expiration on Sunday, but Tehran issued footage showing its commandos boarding a large cargo vessel in the Strait of Hormuz, an act the Iranian authorities presented as a demonstration of control over the waterway. That footage left market participants uncertain about when the world’s most important shipping corridor might fully reopen.
“Amid reports that talks between the U.S. and Iran are showing no progress, crude oil prices have remained firm, contributing to a stronger dollar environment,” said Akihiko Yokoo, senior analyst at Mitsubishi UFJ Bank, in a note reflecting market sentiment.
The dollar index, which tracks the greenback against a basket of currencies including the yen and the euro, stood largely unchanged at 98.81, but remained set for a weekly gain of 0.59%.
Major currency moves were modest. The euro inched up 0.02% to $1.1685, while sterling slipped 0.01% to $1.3466. The dollar benefitted from safe-haven demand as conflict-related uncertainty lingered - it had strengthened in March when concerns deepened, then surrendered some of that advance this month as hopes for a diplomatic resolution had briefly improved.
The Japanese yen pushed weaker for a fifth consecutive trading day, moving 0.01% lower to 159.75 per dollar.
Japan’s Finance Minister Satsuki Katayama reiterated a warning that authorities could take “decisive” action against speculative moves in the foreign exchange market, echoing comments a day earlier that the government had a “free hand” to intervene and that prior interventions had been effective. Such official language has kept markets alert to the possibility of direct policy moves to stem yen declines.
With Japanese authorities continuing to push back against yen weakness, Yokoo added that “it is difficult to expect a scenario in which the yen weakens sharply beyond 160 per dollar in the near term.”
On the inflation front, Japan’s core consumer inflation slowed to below the central bank’s 2% target for a second straight month in March, though analysts cited in market commentary expect inflation to accelerate back above the Bank of Japan’s target in coming months as companies pass higher fuel costs linked to the Middle East tensions onto consumers.
The Bank of Japan is due to conclude a two-day policy meeting on Tuesday. Market discussion indicated the central bank was likely to refrain from raising interest rates next week amid an economy and price outlook clouded by the fading prospect of an early end to the Middle East conflict, while still signalling a readiness to tighten policy should price pressures build.
In Europe, the European Central Bank is scheduled to announce its decision on the deposit rate on April 30. A Reuters poll summary mentioned that just over half of economists expect the ECB to hold its deposit rate then but to raise it in June to guard against an energy-price shock that could disrupt the euro zone economy.
Among other currencies, the Australian dollar strengthened 0.04% versus the greenback to $0.7131, and New Zealand’s dollar rose 0.07% to $0.5856.
Cryptocurrencies recorded modest gains as well: bitcoin rose 0.71% to $78,474.55 and ethereum gained 0.41% to $2,335.99.
Market context
- Stalled U.S.-Iran talks and demonstrated Iranian control over the Strait of Hormuz are supporting safe-haven demand for the dollar.
- Oil prices remained firm amid the conflict-related uncertainty, a factor cited by analysts as reinforcing dollar strength.
- Central bank decisions in Tokyo and Frankfurt are influencing expectations for policy moves, with the BOJ meeting ending on Tuesday and the ECB rate decision due on April 30 ahead of a likely June move.
Note: This report presents market moves, official comments and central bank scheduling as observed in trading and analyst commentary. It does not introduce additional data beyond those market quotes and statements cited above.