Japanese Yen pares losses ahead of US inflation report

• USD/JPY is trading flat as intervention-fueled losses fade.
• Iran’s Security Chief claimed that the US must end the war and release blocked Iranian funds.
• On Wednesday, the US CPI will be this week's key data piece.

The Japanese Yen (JPY) trades flat above 159.00 on Tuesday after several days of US Dollar (USD) strength following the intervention that briefly boosted the Yen. The pair has retraced most of its sharp intervention-driven decline, facing pressure from elevated Oil prices and a firm US Dollar (USD).

The focus remains in the Middle East as Iran’s Security Chief Mohsen Rezai said that the United States (US) must end the war and release blocked Iranian funds, and that other conditions have been conveyed through intermediaries to the US. He finished by saying that “any Iran-Oman agreement on Strait of Hormuz shipping would be separate from the issue of closing the strait.”

Iran’s conditions are to stop all threatening language and insults directed at Iran's national and religious values, a permanent end to military attacks and operations against Iran and its allies across Lebanon, Palestine, Yemen, and Iraq, that the US lifts the naval blockade and withdraw American naval and air forces from the vicinity of Iran.

They also want full financial compensation for damages suffered during recent conflicts without any reduction, and lastly that economic and trade sanctions against the Iranian nation are lifted, alongside the unconditional release of frozen Iranian funds and assets abroad.

On another note, on Wednesday, the US Consumer Price Index (CPI) will be the main catalyst of the week, giving markets an insight into US inflation. July’s inflation is expected to be lower than June’s, which could temper Federal Reserve (Fed) rate hike bets.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.24, maintaining a constructive near-term bullish bias as it holds above the 20-period Simple Moving Average (SMA) at 158.63. A tight support cluster just below price at 159.14 and 158.95 reinforces the underlying bid, while the Relative Strength Index (RSI) around 61 suggests firm but not extreme upside momentum.

On the topside, initial resistance aligns at 159.40, with the 100-period SMA at 160.83 acting as a broader trend cap if bulls extend the move higher. On the downside, immediate support is seen at 159.14, followed by 158.95 and 158.81, before the 20-period SMA at 158.63, where a deeper pullback would begin to challenge the current bullish tone.

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