USD/JPY surges as US strikes Iran; oil prices jump 3%+ on supply fears

USD/JPY advanced 0.5% to 157.20 in early Asian trading as US military strikes on Iranian nuclear facilities triggered broad risk-off flows. The yen initially strengthened on safe-haven demand but was overwhelmed by aggressive dollar buying as oil prices spiked 3.4% on Middle East supply disruption concerns. WTI crude futures jumped to $81.50/barrel, supporting the dollar through inflation expectations. EUR/USD fell 0.3% to 1.0520, while commodity currencies suffered heavier losses with AUD/USD dropping 0.6% to 0.6480. The escalation marks a significant shift in geopolitical risk, with markets pricing in prolonged tensions. Technical analysis shows USD/JPY breaking above the 157.00 resistance level, targeting 158.00 if momentum continues. Traders are positioning for further dollar strength, particularly if oil prices sustain gains above $80/barrel, which could reignite inflation concerns and support hawkish Fed expectations.