USD/JPY Rallies on Risk-Off Surge as Strait of Hormuz Tensions Escalate

Risk-off sentiment gripped global markets as hopes for de-escalation around the Strait of Hormuz faded, driving sharp moves across forex and commodity markets. The Japanese yen strengthened broadly as traders sought safe-haven assets, putting downward pressure on USD/JPY and yen crosses. The US Dollar Index futures initially found support from haven demand but faced competing flows as the S&P 500 sold off, reflecting deteriorating risk appetite. Brent crude oil futures surged on supply disruption fears, adding inflationary concerns that complicate central bank rate paths. The geopolitical premium is now firmly embedded in energy prices, with potential spillover effects on commodity-linked currencies such as CAD and AUD. For traders, the key dynamic is the tug-of-war between dollar and yen safe-haven demand. Near-term, USD/JPY faces downside risk if equity selling intensifies, while resistance may cap any recovery attempts. Monitoring developments around Hormuz and energy supply routes remains critical for positioning across major pairs.