USD/JPY: Impact of Israel-Hamas Conflict on the Currency Pair

investing.com:

With the unfortunate events over the weekend triggering a “risk off” response in the markets, and key US data to come later in the week, both the Japanese yen, still deemed by many as a haven currency, and the US dollar will be in focus this week. Additionally, there is the potential for further Japanese intervention given that the USD/JPY trades not too far from the 150.00 level, where it met some notable resistance, apparently by Japanese authorities, last week.

The start of the week has been all about the Israel-Hamas conflict, creating gaps at the Asian open for many risk assets, including gold, oil, and major indices. Though some of the initial kneejerk reactions to the events over the weekend unwound a little, markets still remained in risk-off mode deep into the European session. This kept the USD/JPY under pressure, although the more risk-sensitive GBP/JPY and EUR/JPY were trading even lower, given that the US dollar has also been acting as a haven currency of late.

Investors are worried that the retaliation by Israel is going to be – as it has already – severe and will raise the tensions between Israel and many other countries around the region, including, of course, Iran. This is why oil prices have remained elevated after gapping higher. In the FX space, traders are taking refuge in the US dollar and Japanese yen while bond investors have piled into European debt with US Treasurys being closed for trading today.

So, the market’s attention will remain on the Israel-Hamas conflict until at least later in the week, when we have some key US data scheduled for release. As a result, the USD/JPY could remain under a bit of pressure for a change following its recent sharp gains.

Apart from a couple of Fed speakers,