Japanese Yen remains depressed vs. USD amid Middle East tensions; lacks follow-through

The USD/JPY pair catches fresh bids at the start of a new week and climbs back closer to last week's swing high, though it lacks follow-through and remains below the 157.00 mark through the Asian session.

A coordinated US-Israel military strike on Iran marks a dramatic escalation of geopolitical tensions and unsettles global markets. Adding to this, concerns that the closure of the Strait of Hormuz – a critical maritime chokepoint – could push up oil prices and trigger a global economic downturn boost the US Dollar's (USD) status as the global reserve currency. This turns out to be a key factor acting as a tailwind for the USD/JPY pair.

Meanwhile, the global flight to safety, along with expectations that the Bank of Japan (BoJ) will stick to its policy normalization path, offers some support to the Japanese Yen (JPY). Furthermore, fears that authorities would step in to stem further JPY fall act as a headwind for the USD/JPY pair. This, in turn, warrants some caution before placing aggressive bullish bets and positioning for any further appreciation for the currency pair.