- USD/JPY weakens to around 157.55 in Wednesday’s early Asian session.
- Trump said new strikes target Iranian leadership.
- The US February ISM Services PMI will be the highlight on Wednesday.
The USD/JPY pair loses ground to near 157.55 during the Asian trading hours on Wednesday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) as escalating US-Israel-Iran tensions boost a safe-haven demand. The US February ISM Services Purchasing Managers Index (PMI) will be in the spotlight later on Wednesday.
US President Donald Trump said most of Iran’s military installations have been “knocked out” and that new strikes targeted Iranian leadership, per CNBC. Israel also struck a compound belonging to a group responsible for electing Iran’s next supreme leader. Persistent geopolitical risks and fears of a prolonged war could provide some support to the JPY in the near term.
Furthermore, hawkish remarks from Japanese officials might contribute to the JPY’s upside. BoJ Deputy Governor Ryozo Himino said on Monday that while the current policy remains “somewhat accommodative,” the central bank should moderately hike rates as long as its economic and price projections are met.
Traders brace for the release of the US ISM Services PMI later in the day. Economists expect the figure to edge down slightly to 53.5 in February from January’s reading of 53.8. In case of stronger-than-expected outcomes, this could underpin the Greenback against the JPY.
