The Japanese yen and the U.S. dollar advanced against their major counterparts in the European session on Friday, as heightened political tensions following the killing of Iranian military commander in the U.S. airstrike dampened risk sentiment.

The U.S. confirmed that Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and top Iraqi militia commander Abu Mahdi Al Muhandis were killed in the air strike on their convoy at Baghdad airport.

The U.S. Department of Defense said Soleimani was behind the recent attacks on the U.S. embassy in Baghdad and said the "strike was aimed at deterring future Iranian attack plans."

Investors await reports on manufacturing activity and construction spending as well as the minutes of the latest Federal Reserve meeting for more direction.

Reversing from its early lows of 108.63 against the greenback and 121.38 against the euro, the yen advanced to more than a 2-month high of 107.91 and more than a 3-week high of 120.31, respectively. The yen is poised to challenge resistance around 106.00 against the greenback and 118.00 against the euro.

The yen rose to a 3-week high of 111.00 against the franc and an 11-day high of 141.20 against the pound, off its early lows of 111.82 and 142.78, respectively. If the yen strengthens further, 109.00 and 140.00 are likely seen as its next resistance levels against the franc and the pound, respectively.

The Japanese currency reversed from its early lows of 72.78 against the kiwi and 75.91 against the aussie, rising to more than 2-week highs of 71.83 and 74.93, respectively. The yen is seen finding resistance around 70.00 against the kiwi and 73.00 against the aussie.

The yen held steady against the loonie, after rising to an 8-day peak of 83.10 in the Asian session. At yesterday's close, the pair was worth 83.61.

The greenback spiked up to a 1-week high of 1.1132 against the euro and a 4-day high of 1.3067 against the pound, reversing from its early lows of 1.1179 and 1.3160, respectively. The greenback is likely to locate resistance around 1.10 against the euro and 1.29 against the pound.

Having dropped to 0.6992 against the aussie and 0.6702 against the kiwi in early deals, the greenback reversed direction and appreciated to 8-day highs of 0.6935 and 0.6644, respectively. The next possible resistance for the greenback is seen around 0.67 against the aussie and 0.65 against the kiwi.

The greenback approached 0.9744 against the franc, setting a 4-day high. The pair had ended yesterday's trading at 0.9712. On the upside, 1.00 is possibly seen as its next resistance level.

Looking ahead, German flash inflation for December is due out at 8:00 am ET.

In the New York session, U.S. ISM manufacturing PMI for December and construction spending data for November will be featured.

The Fed minutes from the December meeting are set for release at 2:00 pm ET.

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