USD/JPY Price Forecast: Dollar ticks up to 159.00 as Iran’s peace talks wobble

• USD/JPY edges up for the second consecutive day to reach session highs past 159.00.
• Fresh US attacks on Irtan have triggered a moderate risk-off reaction.
• BoJ's Himino says that the bank should consider developments in Iran to decide its monetary policy. 

The US Dollar (USD) appreciates against the Japanese Yen (JPY) for the second consecutive day on Tuesday, hitting session highs above 159.00 at the time of writing, as fresh US attacks on Iran put the peace process into question. The pair, however, remains within previous ranges, below last week’s high, at 159.35.

Markets have reacted with caution to news about attacks targeting missile sites and boats in southern Iran, which have been considered defensive by US authorities. Investors, nevertheless, remain hopeful of a peace deal, which is keeping the safe-haven US Dollar from rallying higher.

In Japan, Bank of Japan (BoJ) Deputy Governor Ryozo Himino said earlier on Tuesday that the bank should take into account the developments and the economic consequences of the Middle East conflict to consider the timing and pace of future interest rate hikes. The bank kept its monetary policy unchanged at its latest meeting in April, with three committee members calling for a hike, which has boosted hopes of a tightening move at June’s meeting. 

Technical Analysis: US Dollar holds a neutral-to-positive tone

USD/JPY trades at 159.02, having regained about two-thirds of the ground lost after an alleged intervention on April 30. Momentum indicators are neutral-to-bullish. The Relative Strength Index (RSI) is starting to slope up above the key 50 level. The Moving Average Convergence Divergence (MACD) is still slightly negative, although drawing close to the zero level.

Bulls are likely to find significant resistance at the May 21 high in the mentioned 159.35 area, ahead of the 160.00 level, considered an intervention trigger for Tokyo authorities. Beyond here, the April 30 high, at 160.73, would come into focus.

On the downside, initial support emerges at the 158.65-158.75 area, which held the pair last week. A bearish reaction below here would lure bears into the previous resistance area, around 158.00 ahead of the May 14 low, at the 157.30 area.

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