USD/JPY Hits 40-Year High; Trade Tensions Weigh on CAD

USD/JPY surged to its highest level in 40 years during Monday's session, driven by broad dollar strength and escalating geopolitical and trade dynamics. Crude oil futures settled at $84.91 as Middle East tensions intensified, creating additional pressure on the Japanese yen given Japan's dependency on energy imports. Risk sentiment remained constructive with European equities closing higher and Wall Street extending gains, further undermining yen demand. In trade developments, US-Canada friction escalated as PM Carney labeled new tariff threats a USMCA violation, while USTR Greer countered that Canada offers preferential deals to other nations. USD/CAD likely saw upward pressure as a result. President Trump's meeting with Lebanese President Aoun added a diplomatic dimension amid the broader Middle East uncertainty. Apple's stock advanced on upgrade cycle innovation, contributing to the positive equity backdrop. The USD/JPY breakout above decades-long resistance represents a significant technical event, with momentum indicators pointing to further potential upside. Traders should monitor BOJ commentary and any escalation in Middle East conflict as primary risk catalysts.