Forex Today: Japanese Yen extends rally, Oil prices climb higher

The Japanese Yen (JPY) extended its rally against major currencies on Tuesday, with USD/JPY trading below 154.00 and reaching its strongest level against the US Dollar since mid-February. EUR/JPY was near 178.75 while GBP/JPY moved toward 208.00, with all three pairs down more than 1% so far this week.

Markets continue to price an aggressive Bank of Japan policy-tightening cycle. Strong Japanese wage data has strengthened the case for a BoJ rate hike at next week's meeting, with real wages rising 2.4% year-on-year in July and total cash earnings increasing 4.7%.

Oil prices are also moving higher as tensions in the Middle East remain elevated. WTI gained about 1.4% on Tuesday after rising more than 1.5% on Monday, trading above $92. Fragile traffic through the Strait of Hormuz is adding to concerns about energy supply and keeping oil-market risk premia elevated.

Gold remains range-bound around $4,400, while AUD/USD consolidates above 0.7200. EUR/USD holds above 1.1600 despite edging lower, and GBP/USD remains below 1.3550 as markets assess the UK's fiscal outlook.

With no major high-impact macroeconomic releases scheduled for Tuesday, traders are likely to focus on central-bank signals, Japanese policy expectations, geopolitical developments and oil-price moves for the next direction in major FX pairs.