The conflict in the Middle East continues unabated. The Houthis have become involved in the conflict, raising concerns about the potential closure of the Bab El-Mandeb Strait. Reports indicate that aluminum and steel facilities have been subjected to attacks. The United States is in the process of accumulating military assets, including personnel, seemingly in preparation for a possible landing operation. Two distinct “logics” appear to be at play. The United States is maintaining its military options to exert pressure in negotiations. Second, should there be a plausible opportunity for regime change, infrastructure may be maintained; however, in the absence of such change, Iran’s capabilities are likely to be diminished.

The prevailing risk-off sentiment is clearly reflected in the foreign exchange market, with the dollar experiencing increased demand. The Japanese yen stands out as a notable exception. The market elevated the greenback beyond the JPY160 psychological threshold in anticipation of the weekend. The market commenced on a stronger note; however, Japanese officials intensified their verbal admonitions, prompting a responsive adjustment from market participants. The dollar retraced to approximately JPY159.50 during European trading hours. North American participants might perceive this as a favorable moment to acquire dollars. The euro experienced a decline for the fourth consecutive session leading into the weekend. It experienced a slight decline below $1.15. Today, it examined last Monday’s low near $1.1485. Resistance is currently identified at $1.1520. The lowest point observed since the onset of the Middle East conflict was approximately $1.1410 on March 13.

The yen declined to its lowest point in nearly two years prior to the weekend. Following multiple efforts, the dollar surpassed JPY160 for the first time since July 2024, achieving a value of JPY160.40. It experienced a modest increase earlier today. The currency has retreated to nearly JPY159.50, influenced by increased intervention threats from Vice Minister for International Affairs Mimura, alongside insights from the recent BOJ meeting where a more substantial rate hike was deliberated. In remarks to the Diet, Governor Ueda expressed apprehension regarding the recent developments. The pre-weekend low stood at approximately JPY159.45. A breach of the JPY159.30 level may lead to JPY159, although we believe that intraday traders in North America are less apprehensive about potential intervention. Sterling’s decline is now entering its fifth consecutive session, with today’s movement reaching $1.3325. As the weekend approached, it neared the low observed last week, which was recorded on Monday just above $1.3255. It approached a nearly four-month low around the middle of the month near $1.3220. Nearby support is observed in the 1.3180-1.3200 range.

The Canadian dollar experienced a decline in each session throughout the previous week, ultimately hitting its lowest point in two months. It continues to face pressure today. The greenback approached CAD1.39 before the weekend and nearly reached CAD1.3920 today. The peak for the year occurred in mid-January, approaching CAD1.3930. Stronger resistance may be observed in the CAD1.3985-CAD1.4000 range. The Australian dollar has experienced a decline over the past six consecutive sessions and continues to struggle for traction. At the conclusion of the previous week, it declined to $0.6865, a level not observed since January 23. Today, it slipped below 0.6845. There is minimal activity on the charts prior to $0.6800, although it has remained below the lower Bollinger Band, which is currently situated around $0.6865.