Amid the Israel-Iran conflict, markets are rotating hard into safe haven currencies. While both the USD and JPY are benefiting, the dollar's recovery from oversold levels combined with the Fed's hesitancy to cut gives it more upside room in relative terms. Meanwhile, the Bank of Japan remains firmly dovish, and energy-driven inflation risks only reinforce their caution.

With oil prices spiking and volatility rising, the BoJ will likely stay on hold, especially as yen weakness is now more tolerated than in past cycles. The rebound in yields, risk aversion, and oil-sensitive macro fears all make this pair an ideal play for upside.

LONG USDJPY

Jun 16 2025