The US and China have reached an agreement in their trade negotiations, but the details are unclear, which is making trading difficult. Perhaps it is okay to react with risk-on sentiment, as a certain degree of reconciliation has been achieved, but it is unclear how long this will last. It seems likely that the use of rare earths will limit further tariff increases by the US.
There is also talk of Treasury Secretary Bessent becoming the next Fed chair. Would he want to accept the position? It seems that forces within the administration want to push Bessent out in a dignified manner. Commerce Secretary Lutnick would be happy if that happened.

The US CPI was lower than expected, causing the dollar to fall momentarily. However, what led to the subsequent decline in the dollar was concern over Israel’s attack on Iranian nuclear facilities.
CBS television reported that it had obtained information from US government officials that Israel had completed preparations to launch an operation against Iran. President Trump announced that some US embassy staff in the Middle East were being evacuated, and Secretary of Defence Hegseth approved the evacuation of US military families from the Middle East.
It would not be surprising if Israel launched an attack at any time, and in that case, the market would likely see a significant risk-off trend. Would there be a sell-off of stocks and the dollar? Investment funds would flow into US Treasury bonds, causing interest rates to fall.

Israel launched an attack on Iran despite President Trump’s opposition. It was a wide-ranging, carefully planned attack that killed not only nuclear facilities but also military leaders and nuclear developers.
The extent of Iran’s retaliation remains to be seen, but since military personnel were also targeted, they may not be able to take swift and effective countermeasures. It is likely that countermeasures will include diplomatic efforts, and an immediate closure of the Strait of Hormuz is unlikely.

There is short-term risk for oil prices, so the dollar-yen exchange rate may not decline easily. In the near term, risk-on sentiment is likely to continue in currencies like the euro-yen, but preparations for the eventual arrival of a risk-off market should not be overlooked.