USD/JPY Price Analysis: Fragile ceasefire fuels volatility as markets read between the lines

A fragile ceasefire sparke a short-lived risk-on sentiment, weakening the USD/JPY.
Iran’s demands reduce the chances of a durable agreement, keeping tensions high.
Israel promises to fight on in Lebanon, reducing chances of lasting peace agreement.

Agustin Wazne FXStreet

The USD/JPY pair fell near the 158.30 region on Wednesday, even as the United States (US), Iran and Israel had agreed on a two-week ceasefire.

The so-called "agreement" appears highly fragile, containing numerous conditions that have not yet been fulfilled by all parties involved. Ongoing reports of attacks throughout the Middle East emphasize the instability of the situation. Despite the announcement of a ceasefire, Israel has stated that its operations against Hezbollah in Lebanon will continue, reinforcing the notion that a complete de-escalation is still far off.

US President Donald Trump announced the ceasefire via Truth Social, tying it to the reopening of the Strait of Hormuz, a critical Oil chokepoint. However, the Strait remains closed for now. A senior Iranian official suggested it could reopen later this week, potentially ahead of a planned meeting between Washington and Tehran in Islamabad, Pakistan.

Iran is reportedly pushing for conditions that are unlikely to be accepted, continuing its nuclear enrichment program, asserting control and charging fees for passage through the Strait of Hormuz, full sanctions relief, a withdrawal of US forces from the region, and compensation for war-related damages. These demands significantly reduce the probability of a lasting agreement, keeping geopolitical risk elevated.

Short-term technical analysis:

On the four-hour chart, USD/JPY trades at 158.35, retaining a bearish near-term bias as it holds below both the 20-period Simple Moving Average (SMA) at 159.36 and the 100-period SMA at 159.23. The pair has slipped back under intraday resistance at 158.46, while the Relative Strength Index (RSI) at 31.5 hovers just above oversold territory, suggesting downside pressure persists but short-term selling could start to lose momentum.

On the topside, immediate resistance is now located at 158.46, ahead of a wider supply zone defined by the 100-period SMA at 159.23 and the 20-period SMA at 159.36. On the downside, initial support appears at 158.25, with further cushions at 158.05 and then 157.89; a decisive break beneath this band would open the door to a deeper pullback in the coming sessions.

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

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

AUD/USD bounces off weekly low on Israel-Lebanon ceasefire

AUD/USD recovers slightly from the weekly low during the Asian session on Thursday as a new Israel-Lebanon ceasefire keeps a lid on the safe-haven US Dollar. Meanwhile, the US and Iran remain at odds over key issues, which, along with hawkish Fed expectations, act as a tailwind for the buck. Furthermore, diminishing odds of an RBA rate hike in June cap the currency pair as traders keenly await the US NFP report on Friday.

USD/JPY remains close to 160.00 intervention threshold on Mideast tensions

USD/JPY struggles to find acceptance above 160.00 and retreats from a one-month high during the Asian session on Thursday amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, a new Israel-Lebanon ceasefire caps the US Dollar and supports the currency pair. However, renewed US-Iran tensions favor the USD bulls amid Fed rate hike bets and also hold back the JPY bulls from placing aggressive bets amid economic risks stemming from the Middle East conflict, suggesting that dips are likely to be bought into.

Gold bounces off one-week low; upside seems capped on Iran uncertainty

Gold recovers from a one-week low touched during the Asian session on Thursday, as news of an Israel-Lebanon ceasefire acts as a headwind for the safe-haven US Dollar. However, renewed hostilities in the Gulf, along with stalled US-Iran peace talks, keep geopolitical risks in play and should support the USD. Moreover, US-Iran tensions remain supportive of higher Crude Oil prices, fueling inflationary concerns and bolstering bets for higher interest rates for longer. This should cap the non-yielding bullion and warrants caution for bulls.

Bitcoin drops below $65K amid reinforced bear market signals

Bitcoin dipped further below $65,000 on Wednesday, with onchain data from Glassnode signaling a market firmly in a bear phase. The decline has pushed prices back into a key valuation range between the Realized Price and the True Market Mean. Glassnode noted that a key shift in market structure has also emerged.

The upside-down math of debt

In 2010, Professors Carmen Reinhart and Kenneth Rogoff published a paper, Growth in a Time of Debt, which instantly went viral. The main thesis of the paper was that once a government's debt-to-GDP ratio crosses above 90%, a financial crisis and default are around the corner.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.