• USD/JPY drops 0.36% amidst escalating Israel-Palestine conflict, bolstering the Yen’s safe-haven status.
• Dallas Fed President Lorie Logan emphasizes restrictive monetary policy, spotlighting inflation as a primary concern.
• Upcoming economic data from Japan and the US, including Current Account and inflation figures, to influence the pair’s trajectory.

The Japanese yen (JPY) appeals to its status as a safe haven and appreciates against the Greenback (USD) in the mid-North American session as tensions between Israel and Palestine grow. Fighting during the weekend increased after Hamas claimed an attack on Israel during the Yom Kippur festival. At the time of writing, the USD/JPY is trading at 148.70, down 0.36%.

Safe-haven appeal of JPY intensifies amidst geopolitical strife

Global equities are set to remain pressured as Middle East tensions rise. Dallas Fed President Lorie Logan commented that monetary policy needs to remain restrictive, adding that higher US bond yields would diminish the need to increase interest rates and that her focus is bringing inflation down. Logan added that financial conditions are tightening but in an orderly fashion.

Although US Treasury bond yields remain high, they had dipped as of Monday. The US 10-year Treasury bond yield drops fourteen basis points and oscillates at 4.674%.

In the meantime, last week’s September US Nonfarm Payrolls report portrays the labor market remains hot and justifies the need for more rate hikes, but the CME Fed Watch Tool portrays investors who remain skeptical. In fact, traders expect the US Federal Reserve’s (Fed) first rate cut by May 2024, with odds standing at 51.97%.

USD/JPY are eyeing the current week's data. On the Japanese front, the economic agenda would feature the Current Account. In the US, the Fed parade continues, along with inflation figures on the producer and consumer side. After that, unemployment claims and consumer sentiment would update the status of the US economy