Dollar Holds Steady as Yen Nears Critical 160 Level Amid Iran War Escalation

Global currency markets opened cautiously on Monday as the U.S. dollar maintained its footing while the Japanese yen hovered dangerously close to the psychologically significant 160-per-dollar threshold. Thin trading conditions across Asia and Europe, with many markets closed for Easter, amplified the tension as investors monitored the escalating conflict in the Middle East.

President Donald Trump issued a pointed ultimatum over the Easter weekend, warning that the United States would strike Iranian infrastructure — including power plants and bridges — by Tuesday at 8 p.m. Eastern Time if the Strait of Hormuz remained closed. The strategic waterway, which channels roughly one-fifth of the world's oil supply, has been effectively shut since Iran closed it following the outbreak of the U.S.-Israel conflict with Tehran in late February.

Market analysts note that investors aren't necessarily bracing for immediate military action, but rather pricing in the growing likelihood of a prolonged disruption. Saxo's chief investment strategist Charu Chanana described the dollar as "the cleanest haven" in the current environment, noting that gold, bonds, and the yen have proven less dependable than in typical geopolitical crises. Oil prices have surged well past $100 per barrel, reigniting inflation fears and forcing a dramatic reset in Federal Reserve rate cut expectations — traders now see no Fed move until well into the second half of 2027.

The euro slipped slightly to $1.151, sterling held near $1.3187, and the dollar index stood at 100.2. The Australian dollar edged marginally higher but remained near recent lows.

On the yen front, Japanese Finance Minister Satsuki Katayama signaled readiness to intervene against speculative currency moves, though many analysts question the effectiveness of any such action given persistent safe-haven dollar demand. Speculative short yen positions climbed to $5.7 billion — the highest since Japan's last currency intervention in July 2024 — underscoring deep market skepticism toward the yen's near-term recovery.