Japanese Yen lower as US Dollar firms on heavier Iran sanctions

USD/JPY is edging higher as safe-haven demand lifts the US Dollar, with the Iran sanctions escalation driving flows.
A hawkish Bank of Japan, flagging inflation risks from the Middle East, and a weak Yen limit how far the pair can run.

The US Dollar (USD) is grinding higher against the Japanese Yen (JPY) at the time of writing, with USD/JPY holding north of the 159.00 mark. Safe-haven demand has picked up after United States (US) Treasury Secretary Scott Bessent laid out a sharp escalation of Iran sanctions, and the Greenback is drawing a broad bid.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

The advance carries USD/JPY back above the 159.00 threshold, still well below where the Bank of Japan (BoJ)stepped in at the end of July to knock the pair down from four-decade highs just under 164.00.

Notably, Kazuo Ueda, Governor of the BoJ, singled out the Middle East as a risk to watch for prices and the currency, given the situation now escalating on the sanctions front. If the standoff keeps Crude supported, it feeds the Japanese inflation story that is already nudging the BoJ toward its next hike, a medium-term prop for the Yen even as it slips on Monday.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.12, holding a mildly bullish bias as it remains above both the 100-period Simple Moving Average (SMA) at 158.68 and the 20-period SMA at 158.84. This positioning suggests underlying demand is still intact, while the Relative Strength Index (RSI) around 53 leans slightly positive without reaching overbought territory, hinting at a constructive but not overstretched upswing.

On the topside, immediate resistance appears at 159.16, followed by a nearby horizontal barrier at 159.22, forming a tight cap that bulls need to clear to extend gains. On the downside, initial support is seen at 159.07 and 159.00, ahead of the clustered backing from the 20-period SMA at 158.84 and the 100-period SMA at 158.68, where a deeper pullback would be expected to attract fresh buying interest as long as these averages hold.

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