• USD/JPY rebounds as markets digest last week’s Japanese FX intervention.
• Middle East ceasefire optimism supports risk appetite across Wall Street.
• Traders watch Fed speakers and Friday’s Nonfarm Payrolls report.

USD/JPY advances some 0.48% on Tuesday as the Greenback remained steady during the session following last Thursday’s intervention in the FX markets by Japanese authorities, which bought the Yen, with the pair tanking nearly 2.50% or almost 400 pips. At the time of writing, the pair trades at 157.91.

Buyers step back in near 157.00 despite Japan’s intervention warnings

The financial markets’ narrative hasn’t changed, as the end of the Middle East conflict remains far off, yet investors seem optimistic, as Wall Street ended Tuesday’s session in the green. US Secretary of Defense Pete Hegseth reassured that the ceasefire remains in place, adding that the US has secured a path through the Strait of Hormuz to free hundreds of vessels.

US Secretary of State Marco Rubio said the US Navy is escorting ships navigating the Strait near Iran, adding that the move is a defensive measure and that US forces will respond in the event of an attack.

Given the backdrop, uncertainty about the conflict’s outcome would keep markets volatile. During the day, the US Dollar Index (DXY), which measures the buck’s value against six currencies, is flat at 98.48, while the US 10-year Treasury yield edged lower 0.14%, yet remained almost flat at 4.426%.

Economic activity in the US slowed in April, according to recent data. The ISM Services PMI fell to 53.6 from 54.0 in March. However, employment sub-components improved, increasing from 45.2 to 48.0. Meanwhile, the prices paid index remained high at 70.7—levels not seen since April 2022.

March’s trade deficit widened due to higher AI investment, with imports up 3.6% and exports gaining 3.1%. JOLTS job openings fell from 6.922 million to 6.866 million, missing the 6.83 million forecast.

New York Fed President John Williams stated that the current policy is appropriate given uncertainty from the Middle East conflict. He noted that a swift resolution would clarify outlooks, but said he cannot provide firm guidance on future interest rates at this time.

Given the backdrop, the USD/JPY is feeling the aftermath of last week’s intervention. However, buyers seem to be emerging around 156.50 and 157.00, with traders confident the pair could aim towards 160.00 without triggering another reaction from Japanese authorities.

Regarding this theme, the Japanese Finance Minister Katayama warned on May 4 that “As I have said repeatedly, we will take decisive measures against speculative moves, in accordance with the statement signed between Japan and the United States last year.”

Last week, the Bank of Japan intervened in the markets, with data pointing to roughly $35 billion in US Dollars spent to prop up the Yen, sending it nearly 3% higher on Thursday.

Ahead, the US economic docket will feature speeches by Federal Reserve officials, as traders brace for Friday’s Nonfarm Payrolls report.

USD/JPY Price Forecast: Technical outlook

In the daily chart, USD/JPY trades at 157.89, retaining a broadly bearish near-term bias as spot holds below the clustered simple moving averages around 158.69. The break above the former descending resistance line from 159.23 now leaves price supported by a broader rising structure, yet the Relative Strength Index (14) near 45 still hints at subdued bullish momentum, suggesting rallies may struggle while the pair remains capped beneath the nearby moving average resistance.

On the topside, initial resistance is located at the daily triple simple moving average around 158.69, with a clearer bullish extension only likely if buyers manage to reclaim the psychological 160.00 horizontal barrier. On the downside, first structural support emerges near the long-term uptrend line around 155.38, ahead of the secondary rising trend support near 153.45, while the prior descending trend-line break zone around 148.40 marks a deeper floor if selling pressure accelerates.

(The technical analysis of this story was written with the help of an AI tool.)