The Japanese yen rose against a basket of major and minor currencies in Asian trading on Thursday, beginning a recovery from a five-week low against the US dollar and heading toward its first gain in four sessions. The move was supported by bargain buying after the currency slipped into a range widely viewed as a potential trigger for Japanese authorities to intervene near the 160 level.

Meanwhile, the US dollar retreated from its highest level in two months, while global oil prices declined as hopes grew for a peace agreement between the United States and Iran, particularly after the announcement of a US-brokered ceasefire between Hezbollah and Israel.

Price overview

The dollar fell 0.15% against the yen to 159.83, down from an opening level of 160.06, after reaching an intraday high of 160.08.

The yen ended Wednesday down 0.1% against the dollar, marking its third consecutive daily loss, and touched a five-week low of 160.09 amid escalating military tensions in the Gulf region.

The 160 threshold

Japanese authorities continue to closely monitor currency market movements, particularly as the yen trades around the key 160-per-dollar level, which has long been viewed as a threshold that could prompt renewed intervention to support the currency.

Reuters previously reported that Tokyo intervened several times in late April and early May to halt the yens decline. However, the currencys recovery proved short-lived. At the time, the exchange rate reached 159.25 per dollar, its weakest level since April 30.

Japanese officials have warned against excessive volatility in the yen and indicated that authorities could take decisive action against disorderly market movements.

Finance Minister Satsuki Katayama reiterated that the government is prepared to take appropriate action if currency markets experience excessive or speculative moves.

Japanese interest rates

Bank of Japan Governor Kazuo Ueda said on Wednesday that the central bank needs to continue raising interest rates in response to economic and inflation developments.

Ueda noted that upside risks to prices appear greater than downside risks and could materialize sooner than expected.

Following those comments, market pricing for a 25-basis-point rate hike at the Bank of Japans June meeting rose from 65% to 80%.

The Bank of Japan is scheduled to meet on June 1516 to review monetary policy and assess developments in the worlds fourth-largest economy.

US dollar

The US Dollar Index fell around 0.15% on Thursday, pulling back from a two-month high of 99.55 and heading toward its first loss in four sessions, reflecting weaker performance against a basket of major currencies.

Beyond profit-taking, the dollar came under pressure as risk appetite improved following the announcement that US mediation had successfully secured a ceasefire agreement between Hezbollah and Israel.

Global oil prices

Global oil prices declined roughly 1.5% on Thursday, moving away from their highest levels in nearly two weeks and heading toward their first daily loss in four sessions.

The decline was driven by growing optimism that the United States and Iran could reach a peace agreement that would include reopening the Strait of Hormuz.

Iran war developments

The Trump administration announced late Wednesday that Israel and Lebanon had agreed to implement a ceasefire to end hostilities, boosting hopes for a broader agreement to end the Iran-related conflict.

Trump stated that Iran had agreed to abandon nuclear weapons, while cautioning that its position could still change. He also said the Strait of Hormuz would reopen immediately once Iran signs the agreement memorandum.

The Republican-controlled US House of Representatives approved a resolution on Wednesday aimed at preventing President Donald Trump from continuing the war against Iran.