Yen Stuck Near Monthly Lows as Hawkish Fed Lifts Dollar, But Middle-East Turmoil Caps USD/JPY Upside

USD/JPY is hovering just below its monthly high near 145.45 after the Federal Reserve’s hawkish pause boosted the US Dollar, while diminished expectations for a Bank of Japan rate hike keep the Japanese Yen on the defensive. Geopolitical tensions and trade-policy uncertainty, however, are limiting bullish follow-through for now.

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🏦 Diverging Central-Bank Outlook Fuels Dollar Strength

Driver	Latest Developments	Impact
Federal Reserve	• Held rates at 4.25 %–4.50 % • Dots still imply two cuts by end-2025, but only one in 2026-27 • Seven of 19 officials now favor no cuts in 2025	➜ Lifts USD via higher long-run rate expectations
Bank of Japan	• Next hike now expected Q1 2026 at earliest • BoJ reluctant to unwind stimulus amid weak domestic demand	➜ Weighs on JPY
Trade Policy	• 25 % US tariffs on Japanese autos still unresolved • July 9 deadline for higher reciprocal tariffs looms	➜ Adds downward pressure on JPY

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🌍 Geopolitics Provide Yen Support, Temper Dollar Rally

• Israel-Iran conflict enters day 7; US reportedly weighing strikes if Tehran refuses to curb its nuclear program.
• Trump’s team met in the Situation Room to review military options.
• Iran’s Supreme Leader warns any US involvement would cause “irreparable damage.”

Safe-haven flows into the Yen could intensify if hostilities escalate, offsetting some USD strength.

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📊 USD/JPY Technical Snapshot

Level	Role	Note
146.25-146.30	Resistance	May 29 swing high
146.00	Resistance	Psychological barrier
145.45	Resistance	Range top / monthly peak
144.50-144.45	Support	Minor pullback zone
144.00	Support	Round-number pivot
143.55-143.50	Support	Mid-May congestion
142.80-142.75	Support	Last Friday’s low

Bias: Neutral-to-bullish while above 144.50.
Breakout trigger: Daily close > 145.45 opens 146.00, then 146.30.
Bearish trigger: Close < 144.45 exposes 144.00, then 143.55.

Oscillators on the daily chart are turning higher, hinting that bulls have the momentum edge—but a catalyst (for example, a clear de-escalation in the Middle East or fresh US data) is needed to punch through resistance.

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🔮 Trading Themes to Watch

1. Fed-vs-BoJ Rate Differential: Any shift in Fed rate-cut odds or new hints from Tokyo will move the pair.
2. Tariff Countdown: July 9 auto-tariff deadline could spark volatility in JPY-crosses.
3. Geopolitical Headlines: A sudden flare-up in the Israel-Iran theater could send USD/JPY sharply lower as safe-haven buying kicks in.

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