USD/JPY Drops to 10-Week Low on Japan Intervention as Iran Deal Boosts Risk

USD/JPY has suffered a sharp decline to ten-week lows following what appears to be another round of Japanese intervention, with the pair experiencing a rapid knockdown during European trading hours. Japan has intensified its intervention efforts, pushing the yen significantly higher against the dollar. The move comes amid a complex geopolitical backdrop, as the US and Iran reportedly approach a framework deal to end hostilities, with the Iranian navy signaling possible safe transit through the Strait of Hormuz as US threats recede. The S&P 500 has extended gains into new record highs on the deal optimism. Meanwhile, Eurozone PMI data points to stagflation pressures amid the Middle East conflict, adding uncertainty to the EUR outlook. Risk-on sentiment from the potential Iran deal is supporting equity markets and commodity currencies, while the intervention-driven yen strength creates a divergent dynamic. Traders should monitor intervention rhetoric from Japanese officials and any developments in the US-Iran negotiations, as either could trigger further volatility in USD/JPY and broader FX markets.