During Friday's Asian trading session, the US dollar continued to rise against the Japanese yen, with the exchange rate climbing to around 159.35, marking its third consecutive day of gains. The market is currently driven by a combination of geopolitical risks and policy expectations.
Fundamentally, the Middle East situation has once again become a market focus. US President Donald Trump stated that Israel and Lebanon have reached a 10-day ceasefire agreement, but the situation remains unstable. The Lebanese military reported multiple violations after the ceasefire took effect, with signs of continued conflict in some areas. This uncertainty has strengthened market risk aversion, boosting the US dollar's strength.
Simultaneously, the US and Iran are expected to begin a new round of negotiations over the weekend. While Trump expressed optimism about reaching a long-term agreement, market participants generally maintain a cautious stance. Until the negotiation outcomes become clear, safe-haven capital inflows into the US dollar are putting pressure on the yen, pushing USD/JPY to approximately 159.35.
However, the pair's upward momentum faces limitations from Japanese policy signals. Japanese Finance Minister Shunichi Suzuki confirmed close communication with US Treasury officials regarding currency issues and emphasized readiness for "decisive action" if necessary. This statement has been interpreted by markets as a potential intervention signal, providing support for the yen.
Additionally, Bank of Japan Governor Kazuo Ueda noted that Japan's real interest rates remain at low levels, requiring careful consideration when determining the pace of interest rate hikes. He also mentioned that current inflation primarily stems from supply shocks rather than demand expansion, creating greater challenges for monetary policy adjustments.
From a market structure perspective, USD/JPY currently reflects a tug-of-war between multiple factors: geopolitical risks boosting dollar demand on one hand, and Japanese intervention expectations with potential rate hike paths supporting the yen on the other. The exchange rate has formed a high-level consolidation pattern near the 159 threshold.
Globally, both the US dollar and Japanese yen serve as safe-haven assets, but under current conditions, the dollar benefits from higher interest rates and liquidity advantages, demonstrating relatively stronger performance. The yen faces pressure from long-term accommodative policies, though intervention expectations provide significant support.
Market sentiment clearly reflects caution. In the short term, trading logic primarily revolves around geopolitical risks and policy signals. Without clear directional catalysts, the exchange rate is more likely to maintain its high-level consolidation.
Technically, on the daily chart, USD/JPY maintains a strong upward structure with continuously higher highs, indicating an intact overall trend. The current price approaches previous high zones, with momentum indicators still bullish but showing some signs of weakening. Key resistance levels are observed at 160.00 and 161.20 areas—a break above 160 could open further upside potential. Support levels lie at 158.20 and 157.50 zones, with a break below potentially triggering a correction phase. On the 4-hour chart, the pair shows oscillating upward movement with short-term moving averages maintaining bullish alignment. However, RSI approaches overbought territory while MACD momentum weakens, suggesting slowing near-term upward momentum and possible correction needs, though the overall trend remains bullish.
In summary, USD/JPY's current movement is jointly driven by geopolitical risks and policy expectations. The dollar maintains strength supported by safe-haven sentiment, while the yen receives backing from intervention expectations and policy adjustment signals. Short-term price action may continue high-level consolidation with limited upside but solid downside support. Future direction hinges on Middle East developments and whether Japanese authorities take actual intervention measures, requiring close investor attention to related signals.