The yen could weaken to 159.30 per dollar this week as Middle East tensions drive volatile trading, according to Sony Financial Group analyst Kumiko Ishikawa. The currency pair stood at 158.74 before the latest developments. Ishikawa warned that further dollar-yen gains may trigger intervention concerns, with Japanese and U.S. authorities potentially responding through verbal warnings or rate checks.

The Middle East conflict is reshaping currency markets across Asia. CBA economists note that both Iran and Israel have incentives to escalate militarily to gain leverage in future negotiations. The U.S. dollar benefits from its dual role as a safe-haven asset and major energy exporter. This dynamic is pushing Asian currencies lower as investors seek stability.

Asian currencies are weakening sharply against the greenback, with the dollar rising 1.1% against the Philippine peso to 59.6750 and gaining 0.6% versus the Thai baht to 32.14. The yen's potential slide to 159.30 would mark a significant move that could prompt authorities to act if intervention thresholds are approached.