The Japanese yen appreciated below the 159-per-dollar level on Monday, rebounding from recent three-week lows as softer oil prices and renewed weakness in the US dollar improved sentiment toward the currency. Optimism surrounding a potential US-Iran agreement fueled expectations that the strategically vital Strait of Hormuz could reopen, easing concerns over global energy supply disruptions and offering significant relief to major Asian oil-importing economies such as Japan. Meanwhile, Japan's core inflation rate slowed to a four-year low in April, reinforcing expectations that the Bank of Japan may maintain an accommodative monetary stance in the near term. The yen also benefited from a pullback in the dollar index, which slipped below 99 after investors' reassessed inflation and interest rate expectations amid easing geopolitical tensions. However, market caution persisted after President Donald Trump stated that the US blockade of Hormuz would remain in place until a formal agreement with Tehran is finalized.
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