USD/JPY climbs as Yen lags risk-on reaction to Iran deadline blink
- Trump extended his Iran deadline after Tehran skipped fresh talks, easing immediate concerns over the Strait of Hormuz.
- US March Retail Sales beat at 1.7% MoM, while Fed Chair-designate Warsh delivered hawkish testimony to Congress.
- Japan's March trade data is due late Tuesday, with National CPI to follow Thursday.
USD/JPY rose 0.37% on Tuesday, settling close to 159.40 after pushing as high as 159.65 during the US session. Price has held a rangebound pattern between roughly 158.55 and 159.65 over the past several sessions, with directional moves during overlap hours giving way to tighter, small-bodied candles in quieter periods.
The standoff between Washington and Tehran took a fresh turn after President Trump extended his self-imposed deadline for direct talks at the last minute, with Iran declining to send a delegation to the proposed venue. The White House framed the move as a final goodwill gesture before reverting to maximum pressure, though markets read it as another postponement in a sequence of shifting positions. Traders largely welcomed the de-escalation, with risk assets firming and the US Dollar Index slipping despite stronger-than-expected March Retail Sales (+1.7% MoM versus +1.4% forecast) and notably hawkish testimony from Fed Chair-designate Kevin Warsh.
On the Yen side, Japan's heavy dependence on imported crude leaves the currency disproportionately exposed to any escalation around the Strait of Hormuz, keeping JPY a structural underperformer through the standoff. Tuesday evening's adjusted merchandise trade data and Thursday's National Consumer Price Index (CPI) release (consensus 1.8% YoY for the ex-Fresh Food measure versus 1.6% prior) are the next domestic catalysts.
USD/JPY 15-minute chart
Technical Analysis
In the fifteen-minute chart, USD/JPY trades at 159.41. The pair holds a mild bullish intraday bias as it trades above the day’s open at 158.88, suggesting dips remain supported for now. The Stochastic RSI has eased toward mid-range readings near 36, indicating that upside momentum has cooled after earlier overbought conditions but has not yet flipped decisively bearish.
On the downside, immediate support is located at the current intraday pivot area around 159.41, with a deeper floor at the day’s open near 158.88 if sellers gain traction. With no nearby technical resistance levels provided, price action around these supports and the evolution of short-term momentum signals will be key to gauging whether the pair can extend its advance or slip into a corrective phase.
In the daily chart, USD/JPY trades at 159.41, maintaining a constructive bullish bias as it holds above both the 50-day exponential moving average (EMA) at 158.20 and the 200-day EMA at 154.64. The short-term uptrend remains intact while spot stays supported by these rising averages, although the Stochastic RSI near 27 hints at fading upside momentum after recent gains.
On the downside, immediate support is seen around the 159.40 area as a near-term pivot, followed by the 50-day EMA at 158.20 and then the 200-day EMA near 154.64, where buyers would be expected to re-emerge on deeper pullbacks. With no clear resistance levels derived from the present indicator set, further direction will likely depend on whether buyers can defend the 159 handle and keep price anchored above the 50-day EMA despite softening momentum signals.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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