USD\/JPY gave up early gains and edged down to around 159.20 in late Asian trade on Monday. The move came as the US Dollar weakened, with the US Dollar Index (DXY) near 98.45. <\/p>\n
US-Iran talks due to restart in Islamabad were cancelled after Washington called off a visit by US envoys. Axios said the decision followed a counteroffer from Iran, delivered through Pakistan, that the US judged as not good enough. <\/p>\n
US President Donald Trump said Iran had made a new proposal that was \u201cmuch better, but still not good enough\u201d. Markets are also focused on policy decisions from the Bank of Japan on Tuesday and the Federal Reserve on Wednesday. <\/p>\n
Both central banks are expected to keep interest rates unchanged, while pointing to upside inflation risks and downside economic risks linked to higher energy prices. In technical terms, USD\/JPY stayed above the 20-day exponential moving average (EMA) at 159.14. <\/p>\n
The pair tested a Descending Triangle breakout area near 159.20, with the Relative Strength Index (RSI) around 52. Support is near 159.17 and 159.14, then 157.60; resistance is 160.00 and 160.46.<\/p>\n
We are seeing a familiar pattern in USD\/JPY, though the numbers have changed significantly since last year. We recall the pair testing the breakout area around 159.20 in 2025 ahead of policy meetings. Today, the currency pair sits near 175.50, showing the powerful trend that followed.<\/p>\n
The focus remains on the Bank of Japan, which, despite ending its negative interest rate policy earlier this year, is signaling a very slow path to normalization. With Japan\u2019s national core CPI hovering at 2.8% in the latest reading, the BoJ\u2019s caution keeps the yen under pressure. This hesitation is creating a clear opportunity for carry trades to continue.<\/p>\n
On the other side, the Federal Reserve is hinting at a policy pivot for later this year, a stark contrast to the aggressive hiking we saw previously. Recent US initial jobless claims have edged up to 225,000, and core PCE inflation has cooled to 2.5%. Markets are now pricing in a greater than 60% chance of a Fed rate cut by the third quarter.<\/p>\n
For the coming weeks, we should consider strategies that capitalize on continued upward momentum while managing the risk of a sharp reversal. Bull call spreads on USD\/JPY could be effective, allowing us to profit from a move towards 178.00 with a defined maximum loss. This approach captures the ongoing interest rate differential without exposing us to unlimited risk if sentiment suddenly shifts.<\/p>\n
We must also pay attention to implied volatility, as the risk of verbal or actual intervention from Japanese authorities is now extremely high at these levels. Selling options is therefore risky, as a sudden spike in volatility could lead to significant losses. Purchasing long straddles or strangles could be a way to trade the possibility of a major move, regardless of the direction.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/JPY dips near 159.20 as dollar softens, Iran-US talks cancelled; BoJ\/Fed meetings, key technical levels.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45936","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45936","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45936"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45936\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45936"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45936"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45936"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}