The Japanese Yen (JPY) reversed its decline from a five-week low as safe-haven demand increased. After reports of Iran’s missile strike on US bases, investors preferred the Yen over the Dollar amid heightened Middle East tensions.
Initially, USD/JPY extended its rally, reaching 148.03, driven by the bullish momentum of last week. But it failed to hold above its 100-day SMA and pulled back sharply toward the 146.20 level during US trading hours.
The US Dollar Index (DXY) also fell below 99.00, reflecting a weakening sentiment for the USD. Despite robust manufacturing data, mixed US PMIs, and dovish Fed rhetoric, demand for the Greenback was curbed.
Fed Governor Bowman’s comments on the rate cut added to the pressure on USD/JPY. She noted that inflation is moving toward the Fed’s 2% target and hinted at possible easing in July, triggering speculation that the Fed may pivot sooner than expected.
The 4-hour chart for USD/JPY shows that the price has been consolidating between the 142 and 148 levels. A strong rebound in the US Dollar Index pushed the pair toward 148.30, but it failed to break this resistance.
As the Dollar Index pulled back from resistance, USD/JPY also declined from the 148 level. A break below 142 could trigger a sharp drop in the pair.
