By Satoshi Sugiyama
TOKYO, April 1 (Reuters) – The dollar largely held steady on Wednesday as investors grew cautiously optimistic about prospects for a ceasefire in the Middle East conflict, though mixed signals kept markets on edge.
The yen has recovered from this year’s low of 160.46 per dollar, moving back through the psychologically important 160 level that had fanned concerns about intervention by Japanese authorities. The euro hit more than a one-week high.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, edged up 0.06% to 99.79, with the euro up 0.11% at $1.1565.
The Japanese yen was flat against the greenback to 158.73 per dollar. Sterling strengthened 0.1% to $1.3235.
“Looking at the market as a whole, expectations for a ceasefire are basically rising, so I think the reversal of the long-running ‘buy dollars, sell yen’ trade is likely to continue,” said Sho Suzuki, market analyst at Matsui Securities.
Still, Suzuki added the move has not become a one-way shift into the yen gaining momentum due to concerns that the conflict may not wind down easily.
The White House said U.S. President Donald Trump would address the nation “to provide an important update on Iran” at 9 p.m. EDT on Wednesday (0100 GMT on Thursday). The president said earlier in the day the U.S. could end its military campaign against Iran within two to three weeks, while Secretary of State Marco Rubio told Fox News Washington could see the “finish line” in the Iran war.
At the same time, there were signs of escalation in the conflict. U.S. Defense Secretary Pete Hegseth said the next few days in the war against Iran would be decisive and warned Tehran that the conflict would intensify if it did not make a deal.
The Wall Street Journal also reported the United Arab Emirates is preparing to help the U.S. and other allies open the key Strait of Hormuz waterway by force.
The greenback has benefited from a safe-haven bid since the conflict began in late February, and the U.S., a net energy exporter, is also relatively better positioned to handle oil disruptions than other nations.
This week’s main U.S. economic focus will be Friday’s jobs report for March. It is expected to show that employers added 60,000 jobs during the month, according to the median estimate of economists polled by Reuters, following an unexpected loss of 92,000 jobs in February.
A sharp deterioration in the labor market would likely revive expectations for Fed rate cuts this year, which have been largely priced out as rising oil prices from the Iran war stoke inflation concerns.
For the yen, the Japanese currency was little changed after the Bank of Japan’s quarterly Tankan survey showed business sentiment among large Japanese manufacturers improved in the three months to March, though firms expect conditions to worsen in the next three months.
The dollar should remain supported by the Fed’s cautious stance on rate cuts, while the yen is being underpinned by rising expectations of a Bank of Japan hike in April, Matsui Securities’ Suzuki said.
“We may see a tug-of-war between dollar strength and yen strength, with USD/JPY trading sideways in the upper 150s,” he said.
The Australian dollar strengthened 0.14% versus the greenback to $0.691. New Zealand’s kiwi weakened 0.14% versus the greenback to $0.5737.
In cryptocurrencies, bitcoin fell 0.68% to $67,731.40. Ethereum declined 0.69% to $2,091.32.
(Reporting by Satoshi Sugiyama; Editing by Lincoln Feast.)
