EUR\/JPY traded with mild losses near 184.15 in early Asian trading on Monday. The Japanese yen strengthened against the euro as Middle East conflict escalations supported demand for safe-haven assets.<\/p>\n
Iran\u2019s Islamic Revolutionary Guard Corps said on Monday that Iran will completely close the Strait of Hormuz if US President Donald Trump acts on threats to target a power plant. Trump gave Iran 48 hours to reopen the Strait of Hormuz to shipping or face the destruction of its energy infrastructure.<\/p>\n
Ongoing risks of a prolonged conflict were linked to added support for the yen, which weighed on the cross. Japanese officials also signalled readiness to respond to currency moves.<\/p>\n
Japan\u2019s top foreign exchange official, Atsushi Mimura, said on Monday that the government is prepared to take measures on all fronts in foreign exchange volatility. Verbal intervention was cited as a factor that could support the yen.<\/p>\n
European Central Bank policymakers are due to speak later on Monday. Attention then turns to Japan\u2019s National Consumer Price Index inflation report for February, due on Tuesday.<\/p>\n
Looking back at the situation in early 2025, the escalating conflict near the Strait of Hormuz was a classic signal for a risk-off move. Given that roughly 21% of global petroleum liquids consumption moves through this chokepoint, we saw a predictable flight to the safety of the Japanese Yen. The most direct response for derivative traders was to buy EUR\/JPY puts to position for a drop in the currency cross.<\/p>\n
This type of geopolitical flare-up makes implied volatility a tradable asset in itself. We saw a similar dynamic in early 2022 after Russia’s invasion of Ukraine, where currency volatility surged, making long-volatility option strategies like straddles highly profitable. In that 2025 scenario, buying options was a superior strategy to shorting the pair directly, as it limited risk against sudden, sharp reversals on any de-escalation news.<\/p>\n
The verbal warnings from Japanese officials last year were more than just talk, as they added weight to the Yen’s strength. We knew at the time that Japan’s core inflation had been persistently above the Bank of Japan’s 2% target for over a year, giving authorities a credible reason to defend their currency. This fundamental backdrop meant that safe-haven flows were aligned with the underlying policy direction, making bearish EUR\/JPY positions more robust.<\/p>\n
The upcoming Japanese CPI data point was the key catalyst to trade around for the following weeks. A higher-than-expected inflation print would have only emboldened Japanese authorities, creating further downward pressure on the EUR\/JPY. Therefore, we would have structured trades using option combinations like bear put spreads to define risk while capitalizing on a continued decline.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/JPY slips to 184.15 as yen gains on Middle East tensions; Japan warns on volatility, ECB\/CPI awaited.<\/p>\n","protected":false},"author":103,"featured_media":17053,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-51976","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=51976"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51976\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17053"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=51976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=51976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=51976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}