Nikkei Falls as Dollar Strength and Global Risk Fears Weigh

Japan’s Nikkei 225 slid 1% as global risk sentiment weakened, pressured by escalating Middle East tensions, firm US economic data, and renewed strength in the dollar. The move reflects growing caution after US officials set a deadline for Iran nuclear negotiations, lifting oil prices and fuelling volatility across markets.

The US dollar is heading for its strongest weekly gain in months, climbing sharply against major currencies, including a 1.6% rise versus the yen. Elevated Treasury yields and divided Federal Reserve guidance on rate cuts have reinforced expectations that policy easing may be delayed, tightening financial conditions and weighing on equities.

Although the Nikkei recently printed fresh highs, the stronger dollar and broader risk-off tone triggered profit-taking. Technically, the medium-term uptrend remains intact as long as key support zones hold, but short-term momentum has cooled following January’s strong rally.

Read more on how dollar momentum, rising yields, and geopolitical risks could influence the Nikkei’s next move.