Japanese Yen loses ground as Trump rejects Iran proposal ahead of US CPI

• USD/JPY rises after renewed Middle East tensions support demand for the US Dollar.
• Trump rejected Iran’s latest peace proposal, calling it “totally unacceptable.”
• Investors now focus on Tuesday’s US CPI report.

The USD/JPY pair elevates near the 157.10 region on Monday, with the US Dollar (USD) strenghtening after United States (US) President Donald Trump rejected Iran’s latest peace proposal, calling it “totally unacceptable.”

At the time of writing, the pair trades at 157.18, up 0.33% in the day after recovering from an opening bearish gap.

At the same time, the USD continued to benefit from resilient United States labor-market data released last week, which reinforced expectations that the Federal Reserve (Fed) may keep interest rates elevated for longer. However, traders remained cautious ahead of Tuesday’s US Consumer Price Index (CPI) report, which could significantly influence market expectations for future Fed policy decisions.

A stronger-than-expected inflation reading could push US Treasury yields higher and provide fresh support for the Greenback, while softer CPI data may increase pressure on the USD and allow the JPY to strengthen further through safe-haven demand and lower yield expectations.

Short-term technical analysis:

On the four-hour chart, USD/JPY trades at 157.12. The pair holds above the 20-period Simple Moving Average (SMA) at 156.76, keeping a mild topside bias in place even as it remains well beneath the 100-period SMA at 158.24, which continues to cap the broader recovery. The Relative Strength Index (RSI) at 53.8 leans slightly positive, suggesting moderate bullish momentum but not an extended condition.

On the topside, initial resistance emerges at 157.14, followed by a nearby barrier at 157.22 before the more meaningful 100-period SMA around 158.24. On the downside, immediate support is seen at 157.04, with a secondary floor at 156.99; a break below these levels would expose the 20-period SMA at 156.76 as the next key support zone.

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