Reports that the U.S. has rejected Iran’s counterproposal for a ceasefire have reignited risk-off dollar buying.

Both the U.S. and Iran are still conserving their resources while seeking a path to peace; in other words, precisely because neither side is in a desperate situation, negotiations are likely to drag on.

Trump’s Achilles’ heel is the midterm elections, while Iran’s is the economic blow caused by a slump in crude oil exports.
The ceasefire agreement between Israel and Lebanon is set to expire soon; if fighting resumes, risk-off sentiment is likely to intensify significantly.
While a weaker dollar remains the underlying trend, dollar buying is expected to gain momentum this week.

Regarding the USD/JPY exchange rate, the Japanese Ministry of Finance conducted dollar-selling, yen-buying interventions over a two-week period. However, both the scale and frequency of these interventions were insufficient, and the rate did not break below the 155 yen threshold.
With this approach, once the intervention ends, buy orders will push prices higher, quickly halting the decline and likely causing the market to shift from a sideways trend to a gradual rise.
As I noted last week, it is a foolish strategy to inject more than 1% of GDP into the foreign exchange market only to achieve nothing more than a temporary delay.

This week, markets will likely continue to be driven by developments in Iran, but it is clear that beyond the volatility caused by headlines, this is ultimately nothing more than an extension of the ceasefire.
As a result, sentiment is likely to shift toward risk-on from the current sense of stagnation.
In the short term, the dollar is strong, but this is merely a correction phase; in the medium to long term, the dollar is likely to be sold off.