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.

🏦 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

🌍 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.

📊 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.

🔮 Trading Themes to Watch

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

Stay on top of critical USD/JPY levels, central-bank commentary, and breaking geopolitical developments at DailyForex.pk—your go-to hub for real-time forex analysis.

Yasher Rizwan