The Japanese yen fell to the closely watched 160 level against the dollar on Wednesday, prompting verbal warnings from Tokyo officials as renewed Gulf hostilities bolstered safe-haven demand for the greenback.
The U.S. said Iran launched ballistic missiles that failed to hit their targets, and that American forces conducted strikes on Qeshm Island in response. Diplomatic talks remain at a stalemate, keeping the market mood somber.
The yen's drop erased gains made after Japan's historic 11.7 trillion yen intervention a month ago. Prime Minister Sanae Takaichi said authorities stand ready to respond to exchange-rate moves as needed.
"The terms of trade shock is the big thing driving the yen," said Gustav Helgesson, macro strategist at SEB. Bank of Japan Governor Kazuo Ueda is due to deliver a closely watched speech later Wednesday.
In currency markets, the euro eased 0.1% to $1.1620, while sterling was flat at $1.3460. The dollar index held steady at 99.29.
Attention now turns to U.S. labor data, including private payrolls and Friday's nonfarm payrolls report, which could influence the Federal Reserve's policy path.