The USD/JPY pair lost momentum on Wednesday after rallying toward four-day highs below the 158.00 level during Asian trading. Traders turned cautious following comments from US Treasury Secretary Scott Bessent, who warned about excessive volatility in currency markets. His remarks provided some support to the Japanese Yen and slowed the pair’s upward movement.
The upside in USD/JPY also remains constrained by a softer US Dollar and persistent fears that Japanese authorities could intervene again to stabilize the Yen. Market participants continue to monitor official comments closely after Japan signaled its readiness to act against rapid currency depreciation.
At the same time, geopolitical tensions continue to influence sentiment. According to reports from CNN, aides to US President Donald Trump said the administration is seriously considering renewed large-scale military operations in Iran. Trump also described the current ceasefire as being on “massive life support” after Tehran submitted a revised proposal to end the conflict.
Concerns that tensions between the United States and Iran could escalate further are supporting demand for safe-haven assets, including the US Dollar. Prolonged instability in the Middle East has also pushed energy prices higher, increasing inflation risks globally.
Investors are now awaiting the latest US Consumer Price Index (CPI) data, which could significantly influence expectations for the Federal Reserve. Markets expect headline inflation to rise to 3.7% in April from 3.3% previously, largely due to elevated energy prices linked to the Middle East conflict. Core CPI inflation is also forecast to edge higher to 2.7% from 2.6%.
A stronger-than-expected inflation reading would likely reinforce expectations that the Fed will delay potential interest rate cuts, which could provide fresh support to the US Dollar against the Yen.
However, intervention risks continue to limit bullish momentum. Japan’s Finance Minister Satsuki Katayama recently confirmed ongoing coordination with US officials regarding currency market developments, while senior FX official Atsushi Mimura reiterated that further intervention remains possible if volatility intensifies.
Trade Idea
Buy above 158.10 targeting 159.20, with support near 157.20. Watch US CPI data, Fed expectations, and possible Japanese intervention headlines closely for volatility.