• USD supported by safe-haven demand amid Middle East tensions and Hormuz uncertainty, keeping investors cautious.
• Yen struggles to gain traction with the BoJ maintaining a gradual, cautious normalization stance.
• Policy divergence remains the key driver as Fed expectations contrast with Japan’s still-accommodative framework.

The USD/JPY pair is trading near the 159.20 price region, having surged roughly 100 pips from its intraday low and posting modest daily gains as markets continue to digest developments in the Middle East and shifting expectations around central bank policy.

The US Dollar (USD) continues to be bolstered by safe-haven demand despite some fluctuations in market sentiment driven by news from the Middle East. Ongoing uncertainties related to tensions with Iran and the strategic significance of the Strait of Hormuz are sustaining demand for the Greenback, even as investor risk appetite shows occasional signs of improvement.

The latest on the matter indicates that US President Donald Trump informed Lebanon’s President Aoun that a ceasefire will be announced within hours, according to Qatari Al-Araby TV reports.

The Yen (JPY) is struggling to gain significant traction. The Bank of Japan (BoJ) continues with a gradual normalization approach, yet policymakers remain cautious, emphasizing their dependence on data and the necessity for sustainable inflation.

Short-term technical analysis:

In the four-hour chart, USD/JPY trades at 159.15, holding a neutral near-term bias as it consolidates just under the 100-period Simple Moving Average (SMA) at 159.29 while clinging to nearby horizontal support at the same price area. The 20-period SMA (159.06) runs below spot and lends initial trend support, while the Relative Strength Index (RSI) at 53 suggests mildly positive momentum without entering overbought conditions, hinting that the pair is stabilizing rather than trending decisively.

On the topside, immediate resistance is seen at the 100-period SMA around 159.29, followed closely by the horizontal barrier at 159.30, forming a tight cap that bulls would need to clear to extend gains. On the downside, the first layer of support sits near the pivot zone around 159.15, with additional cushions emerging at 158.94 and then 158.85, where a break would expose deeper corrective pressure within the broader consolidation.

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