USD/JPY rises as Iran-Israel conflict escalates, BOJ holds rates steady

USD/JPY gained 0.4% (60 pips) to 157.85 in early Asian trading as geopolitical tensions drove safe-haven flows into both currencies. Israel confirmed intercepting Iranian missiles overnight, intensifying Middle East conflicts and spurring risk-off sentiment across markets. The Bank of Japan maintained its policy rate at 0.25% as expected, while confirming bond tapering plans for 2025. Governor Ueda's cautious tone on future rate hikes weakened the yen despite risk-off flows. Oil prices surged 2.1% on supply concerns, supporting USD through petrodollar dynamics. Technical indicators show USD/JPY testing resistance at 158.00, with momentum indicators turning bullish. Support lies at 157.20 (Asian session low). Traders are monitoring whether US intervention in the Middle East conflict could further boost dollar demand, potentially pushing the pair toward 158.50 psychological resistance.