IRAN: States Air Defenses Activated After Explosions Near Bandar Abbas

The USD/JPY range overnight  was 159.10-159.48, Asia is currently trading around 159.40. The pair continues to find support on dips and is eyeing the top end of its recent range heading into the BOJ meeting today. The market is clearly bearish on the Yen as the pair continues to lag the recent pressure being put on the broader dollar complex. While the dips continue to be well supported the Yen bears will be looking for another challenge of the 160 area at some point, looking for the move to regain momentum on a sustained break higher. The BOJ meeting today could be key, can the BOJ be hawkish enough if they hold rates again? I suspect that is a tough challenge. On the day, the first support is toward 158.00-158.50 as the market looks to form a base from which to test this 160 area again. Something or someone has been capping any move challenging the 160 area since mid March, will they continue to do so ? The Jaw-boning is becoming more frequent now, but I suspect the market is becoming less sensitive to their threats. Can they continue to keep it below 160 with just words, time will tell. 

• MNI BOJ Decision - Uncertainty around the timing of the BOJ's next rate hike remains elevated, though a move in July is still seen, and priced (94% chance of a 25bp hike), as the most likely outcome. By that stage, policymakers should have sufficient data to assess the impact of higher crude oil prices on growth, wages, and inflation. In the near term, the BOJ is expected to leave policy settings unchanged.  The market currently assigns a 5% probability of a 25bp hike today.  That said, the BOJ may revise its forecasts by lowering growth projections and lifting its FY2026 inflation outlook, reflecting rising oil prices and ongoing geopolitical tensions in the Middle East. 
• CFTC Data up to 21/04/2026 shows Asset Managers maintaining their very newly built short Yen position, -12792(Last -8822). The Leveraged community added a decent clip to their own core shorts, –80578(Last -65309).
• Options : Close significant option expiries for NY cut, based on DTCC data: 159.10($230m), 159.40($615m). - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 60 Points
• Data/Event : Jobless Rate, BOJ

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

US Tsy Bessent has posted via X: "*BESSENT: IRAN’S OIL INDUSTRY STARTING TO SHUT AFTER US BLOCKADE
*SECRETARY BESSENT POSTS ON X ABOUT IRAN OIL INDUSTRY" - BBG
 "*BESSENT: PUMPING WILL SOON COLLAPSE
*BESSENT: GASOLINE SHORTAGES IN IRAN NEXT" - BBG

• Gold's sensitivity to higher bond yields (and therefore rate assumptions) was on full show overnight as oil prices were up, with bond yields as gold fell.  
• Gold markets are cautious ahead of the FOMC meeting beginning Tuesday, and a week full of Central Bank meetings. Whilst rates are expected to remain on hold, concerns that higher oil prices could force a more hawkish outlook is weighing on the non-yielding assets.
• Brent climbed toward $110 per barrel, stoking fears of persistent inflation. Whilst gold is an inflation hedge, the immediate market reaction focused on the likelihood of  hawkish central bank signals.
• Gold finished the US trading day at US$4,682, for losses of -0.58%
• Gold is caught in a technical squeeze, partially contributing to the downward pressure.  Gold has been wedged between the 20-day EMA at $4,735 and the 100-day EMA at $4,660.
• The probability of growing hawkish rhetoric from Central Bankers is high and for now will likely continue to weigh on the precious metal.
• A break below the 100-day EMA sees little technical support below to $4,600.  Gold has trended in a $4,600 - $4,800 range throughout April and the challenges ahead this week could see it break lower.