Yen Falters Amid Political Tensions and Tariff Turmoil

The Japanese yen experienced a decline on Tuesday after reports suggested that Japan's Prime Minister, Sanae Takaichi, expressed concerns about further interest rate hikes to Bank of Japan Governor Kazuo Ueda. This development raises questions about the next potential rate increase, indicating possible friction over monetary policy.

Before the report, a majority of economists expected the Bank of Japan to raise rates to 1% by the end of June, with markets already pricing in a 70% chance of a hike by April. However, traders are now seeing a 51% likelihood of an April hike and a 65% chance by June. The yen weakened 0.92% to 156.09 per dollar.

Meanwhile, traders are also focused on new U.S. tariffs following the Supreme Court's ruling. The Trump administration aims to implement new tariffs, raising concerns among major trading partners. Additionally, geopolitical tensions with Iran add to market uncertainties as the U.S. evaluates its diplomatic strategies.