The Japanese yen fell in Asian trading on Thursday against a basket of major and minor currencies, giving up its three-week high against the US dollar due to correction and profit-taking operations, as the American currency recovered from low levels amid growing investor concerns regarding the fragility of the ceasefire agreement between the United States and Iran.

In light of the current division over the probabilities of the Bank of Japan raising interest rates when it meets later this year, the latest forecasts indicate that in the event of the collapse of the ceasefire in the Middle East, Japanese interest rates will remain unchanged for the third consecutive meeting.

Price overview

* Japanese yen exchange rate today: the dollar rose against the yen by 0.25% to (¥158.95), from the opening price of the day at (¥158.54), and recorded the lowest level at (¥158.45).

* The yen ended Wednesday’s trading up by 0.65% against the dollar, in the second consecutive daily gain, and recorded a three-week high at 157.89 yen, after the United States and Iran agreed on a two-week ceasefire, which includes opening the Strait of Hormuz to global navigation.

US dollar

The dollar index rose on Thursday by about 0.2%, to begin recovering from a four-week low at 98.53 points, reflecting a recovery in the levels of the American currency against a basket of global currencies.

Investors cautiously and anxiously assessed the resilience of the fragile ceasefire, which began yesterday, Wednesday, and lasts for two weeks between the United States and Iran, in light of escalating regional tensions, especially after Israel launched violent military attacks on Lebanon, which angered Iranian authorities and increased uncertainty in the markets.

Sho Suzuki, market analyst at Matsui Securities, said: Some doubts may have begun to appear about the sustainability of the ceasefire expectations, or even the possibility of concluding a final ceasefire at all.

Iran war updates

* U.S. Vice President JD Vance describes the ceasefire with Iran as a "fragile truce" and says that Trump is "eager to make progress."

* The Speaker of the Iranian Parliament states that the United States violated the ceasefire agreement.

* The ceasefire agreement fails to stop the fighting between Israel and Hezbollah, and Israeli strikes result in the death of 254 people in Lebanon.

* Iran says that peace talks will be "illogical" in the wake of the Israeli strikes on Lebanon.

* Washington confirms that the situation in Lebanon is outside the framework of the ceasefire agreement, while Tehran insists that it is one of the fundamental clauses.

* The United States and Iran prepare for talks in Pakistan amid disputes between the two countries over the terms of the nuclear program.

Japanese interest rates

* The pricing of the probabilities of the Japanese central bank raising interest rates by a quarter of a percentage point in the April meeting is stable around 10%.

* In order to re-price those probabilities, investors await the release of more data about the levels of inflation, unemployment, and wages in Japan.

Expectations about the performance of the Japanese yen

Sho Suzuki, market analyst at Matsui Securities, said: With the continued situation in the Middle East, there seems to be a trend toward expansionary fiscal policy again. This in turn contributes to the weakness of the yen.

Suzuki added: In the event of the collapse of the ceasefire, expectations for a interest rate hike in April may begin to fade, which may in turn lead to the weakness of the yen.

Suzuki explained: Raising the interest rate depends heavily on the situation in Iran, so it is likely that the Bank of Japan will wait until the last moment before the meeting to assess the developments of the situation.

Iran and the United States have reached a conditional ceasefire agreement for a period of two weeks, during which maritime traffic will be permitted to pass through the Strait of Hormuz.

This development comes more than a month after coordinated attacks launched by the United States and Israel on Iran, and only hours after U.S. President Donald Trump issued a threat stating that "an entire civilization will be destroyed tonight" if Iran did not reopen the strait.

Pakistani Prime Minister Shehbaz Sharif, who mediated the negotiations, stated early Wednesday that the ceasefire had entered into effect immediately.

U.S. and Iranian Statements

Trump stated that he agreed to "suspend the bombing and attacks on Iran for two weeks" provided that Tehran agrees to reopen the Strait of Hormuz, a vital corridor for oil shipments and other exports from the Gulf.

In a post on his platform, Truth Social, Trump clarified that he agreed to the temporary ceasefire because "military objectives have already been achieved and exceeded."

This follows his earlier warnings that the United States could eliminate Iran "in one night" and that "an entire civilization will be destroyed tonight and will never return," threats that were condemned by both UN Secretary-General António Guterres and Pope Leo XIV.

Later on Wednesday, Trump stated that the United States would work closely with Iran and discuss "tariff exemptions and sanctions relief." He added in another post that "any country supplying Iran with military weapons will immediately be subject to a 50% tariff on all goods sold to the United States, effective immediately, and there will be no exceptions or exemptions."

U.S. Defense Secretary Pete Hegseth stated that the U.S. military will ensure Iran adheres to the ceasefire and comes to the negotiating table. He added that forces will remain "in their positions, ready, vigilant, and prepared to resume operations at any moment."

For its part, Iran agreed to allow the passage of ships through the Strait of Hormuz for two weeks, with the passage to be coordinated by the Iranian military. Iran also issued a 10-point plan, including, among other things: a complete halt to the war in Iran, Iraq, Lebanon, and Yemen; "full commitment" to lifting sanctions on Iran; the release of frozen Iranian funds held by the United States; and "full payment of compensation for reconstruction costs." The plan added that "Iran fully commits to not seeking to possess any nuclear weapons."

The Iranian Supreme National Security Council said in a statement: "Iran's victory on the ground will also be consolidated in political negotiations."

According to Sharif, the ceasefire will also include Lebanon, where Israel is engaged in confrontations with the Iranian-backed Hezbollah group.

Israel's Position

Sirens sounded in Israel immediately after Trump’s announcement, and the Israel Defense Forces said they intercepted missiles launched from Iran. Loud explosions were also heard in Jerusalem on Tuesday evening.

Hours after the ceasefire was confirmed, Israeli Prime Minister Benjamin Netanyahu said: "Israel supports President Trump’s decision to suspend strikes on Iran for two weeks provided that Iran opens the straits immediately and ceases all attacks on the United States, Israel, and other countries in the region." The statement added that "the ceasefire does not include Lebanon," where Israeli ground forces are present. It remains unclear to what extent Netanyahu was involved in the decision-making process with Trump.

Next Steps

Pakistan, which is mediating the negotiations, called for delegations to meet in Islamabad on Friday "to negotiate more broadly on a final agreement to settle all disputes."

White House spokesperson Karoline Leavitt acknowledged that there are ongoing discussions regarding in-person meetings, but stressed that "nothing is final until it is officially announced by the President or the White House."

Regardless of the form of the negotiations, they are expected to be extremely difficult. Some strikes continued after the ceasefire, as Kuwait reported Wednesday morning that Iranian attacks caused damage to power and desalination plants as well as oil facilities. The Kuwaiti military said in a statement on the X platform: "Kuwait's air defenses intercepted an intense wave of hostile Iranian attacks, as 28 drones targeting the State of Kuwait were dealt with."

The United States and Iran appear to have contradictory positions on what the ceasefire includes. It is worth noting that both countries held two rounds of talks during the past year, and both rounds led to an escalation of military tension amid negotiations.

The leaders of France, Italy, Germany, Britain, Canada, Denmark, the Netherlands, Spain, and the European Union welcomed the ceasefire and called in a joint statement for a "swift and lasting end" to the war. They said: "We call on all parties to implement the ceasefire, including in Lebanon."

The minutes of the American Federal Reserve meeting for the month of March showed that officials still expect to cut interest rates during 2026, despite the high level of uncertainty due to the war in Iran and customs duties.

Most participants indicated that the war may push toward adopting a more accommodative monetary policy if high gas prices lead to pressure on the labor market and consumer portfolios. They also stressed the necessity of being "flexible" when assessing the impact of the war on inflation, which remained higher than the Federal Reserve's target, and on employment, which remained stable over the past year.

The meeting minutes stated: "Many participants see that it would be appropriate in due course to lower the target range for the federal funds rate if inflation falls in line with their expectations."

The general consensus expected one cut this year, unchanged from the last update in last December. The minutes pointed to caution regarding "an additional decline in labor market conditions, which may necessitate cutting interest rates further, given that the rise in oil prices may reduce the purchasing power of households, tighten financial conditions, and slow growth abroad."

Decision to keep interest rates steady

The Federal Open Market Committee voted 11-1 to maintain the target range for the overnight borrowing rate between 3.5% and 3.75%.

Despite that, officials expressed concern that the developments in the Middle East may lead to sustained inflation necessitating a rate hike later. The minutes indicated that "the majority of participants indicated that it is too early to know how the developments in the Middle East will affect the American economy, and they considered it prudent to continue monitoring and assessing the effects on the appropriate monetary policy."

The participants met weeks after the American and Israeli attack on Iran, which caused a wave of rising energy prices and renewed fears of rising inflation. The announcement of the ceasefire led to a sharp decline in oil, but the extent of the agreement's durability is still subject to doubt.

Inflation and the labor market

Despite the disruptions, participants expected that inflation would continue to move toward the Federal Reserve's target of 2%. They confirmed that customs duties still represent a threat, but most of them consider their impact temporary when calculating inflation.

Chair Jerome Powell expressed that raising rates now to repel the rise in inflation may have negative effects in the long term due to the delay in the impact of interest rate decisions. At the same time, officials expressed concern regarding the labor market, which still creates enough jobs to maintain the stability of the unemployment rate, but most of the growth in jobs was in the healthcare sector, which raises concern about the market's stability and the capacity for growth.

"The vast majority of participants see that the risks on the employment side are tilted toward the downside. Specifically, many participants warned that the labor market appears vulnerable to negative shocks in light of low rates of net job creation."

Market expectations and economic growth

Markets generally expect that the Federal Reserve will remain on its stance until the end of the year, but the ceasefire increased the probabilities of a potential cut.

On the economic front, indicators showed signs of slowing, as the Gross Domestic Product rose by 0.7% in the fourth quarter of 2025, and it is expected to record only 1.3% in the first quarter of 2026.

The main indices in Wall Street rose to their highest levels in about a month on Wednesday after the United States and Iran agreed to a two-week ceasefire, which led to a decline in crude oil prices with expectations for the resumption of energy supplies through the Strait of Hormuz.

The announcement came hours before the deadline set by American President Donald Trump for Iran to reopen the Strait of Hormuz, the corridor through which about a fifth of global oil trade passes.

A high-ranking Iranian official told Reuters that the corridor may be opened on Thursday or Friday before the peace talks if the countries agree on a framework for the ceasefire.

Global markets, which were suffering from conflicting signals for weeks, witnessed an upward wave, with the rise of stock exchanges in Asia and Europe, while oil prices declined to less than 100 dollars per barrel.

David Morrison, senior market analyst at Trade Nation, said: "Whether these early risk-on moves are sustainable or not is another matter… if shipments start moving through the Strait of Hormuz again, and there was strong evidence of the possibility of returning to the normal situation before the war, that will encourage investors."

He added: "But looking at the complexity of the surrounding issues, it is unlikely that a ceasefire for two weeks will be enough to convince investors that it is safe to return to the market."

At 10:06 AM US Eastern Time:

The Dow Jones Industrial Average rose 1,308.99 points, or 2.81%, to 47,893.45 points.

The S&P 500 climbed 155.91 points, or 2.36%, to 6,772.76 points.

The Nasdaq Composite rose 617.51 points, or 2.81%, to 22,635.36 points.

The Russell 2000 index for small companies jumped 3% to reach its highest level in more than a month, while the CBOE volatility index declined 4.74 points to 20.99, after recording its lowest level since February 27.

The energy sector in the S&P 500 was the only one in the red zone, declining by about 5%:

ExxonMobil lost 6.3%

Chevron decreased 5.5%

Occidental Petroleum declined 7.7%

The shares of travel companies jumped, as Southwest Airlines rose 10.8% and United Airlines 12.8%, which supported the industrial sector shares in the S&P 500 with a rise of 3.8%, and it was the highest among the gaining sectors.

The cruise companies Carnival and Norwegian Cruise Line added 14.2% and 12% respectively.

The technology index in the S&P 500 rose 2.8%, supported by the shares of electronic chip companies. The Philadelphia Semiconductor Index reached a record level briefly, as it rose in the end 5.3%.

The gains of the companies Goldman Sachs and American Express contributed to supporting the Dow Jones index.

This week, the focus will be on domestic inflation data to see if the high oil prices during the war increased price pressures. Also, the statements of Federal Reserve officials and the minutes of the March meeting will be analyzed.

Market bets show a 33.9% probability for a cut of 25 basis points in December, according to the FedWatch tool from CME, compared to 13.6% on the previous day. Traders were expecting two cuts before the outbreak of the war.

Among other prominent stocks:

Levi Strauss rose 12.8% after the company raised its annual sales and profit forecasts.

Delta Air Lines rose 8.6%, despite the expectation of profits lower than expected for the second quarter, and it did not update its annual forecasts due to uncertainty regarding fuel prices linked to the Iranian war.

Advancing shares outperformed declining ones by a ratio of 6.74 to 1 on the New York Stock Exchange, and by a ratio of 5.53 to 1 on Nasdaq.

The S&P 500 recorded 18 new 52-week highs and recorded no lows, while the Nasdaq Composite recorded 108 new highs and 17 new lows.