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Tomorrow's forex outlook: Nervous trading expected amid Middle East tensions

Thu May 21, 2026 5:21 pm JST Currency

The dollar-yen exchange rate in the foreign exchange market from tonight through tomorrow is expected to see nervous trading while monitoring the progress of peace negotiations between the United States and Iran. The anticipated range is 158.50 yen to 159.50 yen per dollar.

U.S. President Trump stated on the 20th that negotiations with Iran are in the final stages, but warned that attacks would resume if no agreement is reached. The outlook for the Middle East situation remains difficult to read, and market movements will likely focus on monitoring related headlines.

Meanwhile, Bank of Japan Policy Board member Junko Koeda stated at a financial and economic meeting in Fukuoka Prefecture on the 21st that "it is important to raise the policy interest rate at an appropriate pace and proceed with measures to address high prices." However, market reaction was limited, and if an early rate hike by the BOJ is being priced in, this could weigh on the yen.

In U.S. time tonight, data will be released including initial jobless claims for the previous week, the Philadelphia Fed Manufacturing Index for May, housing starts for April, and the flash Purchasing Managers' Index (PMI) for May.

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.

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