Key Moments
- USD/JPY trades almost unchanged around 159.00 during the Asian session as traders await developments on a potential US-Iran agreement.
- Expectations for at least one Federal Reserve rate hike this year slipped to 51% from 61.3%, according to the CME FedWatch tool.
- Japan’s 10-year JGB yield edges up to around 2.77%, close to the multi-decade peak of 2.81% reached on Tuesday, amid fiscal concerns.
FX Market Overview
The USD/JPY pair is trading in a narrow range near 159.00 during the Asian session on Thursday, with price action turning sideways as market participants wait for new information on talks between the United States and Iran. The consolidation follows comments from US President Donald Trump on Wednesday indicating that discussions are in their “final stages.”
The US Dollar Index (DXY), which measures the Greenback against six major peers, is trading slightly higher, hovering close to 99.20 at the time of writing. The index stalled its advance on Wednesday after touching a fresh six-week high at 99.47. That move came after President Trump expressed confidence that an agreement with Iran would be concluded soon.
“We’re in the final stages of Iran. We’ll see what happens. Either have a deal or we’re going to do some things that are a little bit nasty, but hopefully that won’t happen,” Trump said, Bloomberg reported.
Rates Outlook and Oil-Linked Sentiment
Improved sentiment around the US-Iran track has driven a notable decline in oil prices, which in turn has slightly softened expectations for additional Federal Reserve tightening this year. Based on the CME FedWatch tool, the probability that the Fed will deliver at least one rate increase this year has eased to 51%, compared with 61.3% on Tuesday. This still represents a substantial shift from the earlier pricing of two rate cuts before the outbreak of the Middle East conflict.
Japan: Fiscal Concerns and Bond Yields
In Japan, fiscal anxiety has increased following the announcement of an extra budget by Prime Minister Sanae Takaichi, designed to counter the economic impact of the Middle East situation. Against this backdrop, 10-year Japanese Government Bond (JGB) yields are up 0.11%, trading near 2.77%. That level is close to the multi-decade high of 2.81% reached on Tuesday.
| Market Indicator | Latest Level | Recent Reference Level | Comment |
|---|---|---|---|
| USD/JPY | around 159.00 | April 30 high: 160.73 | Trading flat with modest bullish bias |
| US Dollar Index (DXY) | near 99.20 | Six-week high: 99.47 | Rally paused after Trump comments on Iran |
| CME FedWatch – odds of at least one Fed hike this year | 51% | 61.3% (Tuesday) | Expectations eased after oil price decline |
| 10-year JGB yield | around 2.77% | Multi-decade high: 2.81% | Supported by rising fiscal concerns |
USD/JPY Technical Picture
At press time, USD/JPY is trading almost unchanged near 159.00, maintaining a slight bullish inclination while staying above the 20-day exponential moving average (EMA), which stands at 158.37.
The Relative Strength Index (RSI) sits around 55, signaling neutral-to-positive momentum. This suggests that buyers continue to retain some control without pushing the pair into overbought territory.
On the downside, the first notable support is aligned with the 20-day EMA near 158.37. A daily close below that level would undercut the constructive bias and could pave the way for a deeper corrective move toward the May 14 low at 157.31. On the upside, the pair’s next objective is a potential retest of the April 30 peak at 160.73.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
