The Japanese yen strengthens while the US dollar comes under pressure; Middle East tensions drive oil prices close to $100.

1. During Wednesday's Asian trading session, the Japanese yen remained near its highest level since February, continuing to put pressure on the US dollar. The US Dollar Index once fell by 0.2% to 98.62, hitting a new two-week low. Meanwhile, as the war in the Middle East continues to escalate, Brent crude oil futures rose more than 1% to $99.67 per barrel, approaching the $100 mark. Yemen's Houthi forces launched attacks on multiple cities in Saudi Arabia, while the US military struck several Iranian oil tankers, and Iran launched missile attacks on a US military base in Jordan, further expanding the scope of the conflict.2. During Wednesday's session, USD/JPY once fell by 0.67% to 452.94. The yen has risen by about 4% since September, strengthening not only against the US dollar but also appreciating against carry trade target currencies such as the euro, the British pound, the Mexican peso, and the Turkish lira. The current rally has been mainly driven by market expectations that the Bank of Japan may accelerate monetary policy tightening, expectations that Japanese investors may repatriate overseas assets, and pressure from the US side. Most traders expect the Bank of Japan to raise rates by 25 basis points at the September 17-18 meeting. Whether the yen can strengthen further will depend on whether the central bank sends hawkish signals.3. According to the head of Asian macro strategy at BNY Mellon Investment, the yen still remains significantly below its "fair value" range of around 140, so further appreciation should not be surprising. However, some analysts warn that strong US economic data, elevated energy prices, and concerns about Japan's debt sustainability still pose headwinds.