Dollar Stable Amid Middle East Tensions as Traders Watch Japan Intervention Risk

The U.S. dollar traded steadily on Friday as renewed hostilities between the United States and Iran boosted safe-haven demand, while the Japanese yen stabilized amid growing speculation that Tokyo could intervene again in currency markets.

Currency markets remained cautious after fresh exchanges of fire between Washington and Tehran disrupted hopes for a lasting ceasefire agreement in the Middle East. The renewed tensions also pushed oil prices higher, reinforcing investor demand for the dollar as a traditional safe-haven asset.

The dollar index, which measures the U.S. currency against a basket of major peers, remained largely steady after recovering from recent lows earlier in the week. Analysts said geopolitical uncertainty and expectations surrounding U.S. economic data helped support the greenback.

Meanwhile, the Japanese yen steadied after recent sharp swings triggered speculation of intervention by Japanese authorities seeking to slow the currency’s decline against the dollar. Traders have increasingly focused on the psychologically important 160-yen-per-dollar level, which officials in Tokyo are believed to be defending aggressively.

Former Bank of Japan officials and market analysts suggested Japanese authorities may have already spent tens of billions of dollars supporting the yen in recent weeks, although Tokyo has not formally confirmed intervention activities.

Japan’s Finance Ministry has repeatedly warned against excessive speculative moves in foreign exchange markets, emphasizing that authorities are prepared to take “decisive measures” if volatility intensifies further.

Elsewhere, investors continued monitoring developments surrounding possible negotiations between the U.S. and Iran, with reports suggesting diplomatic discussions were still ongoing despite the renewed clashes. Analysts noted that any breakthrough or collapse in talks could quickly shift sentiment across global currency and commodity markets.

Market attention is now turning toward upcoming U.S. employment data and Federal Reserve policy signals, which could influence the dollar’s near-term direction alongside geopolitical developments in the Gulf region.