The USD/JPY currency pair rose by 0.4% to near 159.50 in early European trading on Thursday, rebounding strongly after a two-day corrective move. This recovery was driven by revived safe-haven demand for the US Dollar, following threats from the United States to hit Iran extremely hard in the coming weeks. US President Donald Trump stated in a planned speech, 'We are going to hit them extremely hard over next two to three weeks, and bring them back to the stone ages,' and further threatened to attack Iran’s electricity infrastructure if it does not accept a deal [1].
The US Dollar Index (DXY), which measures the Greenback against six major currencies, was up 0.5% to near 100.00 during press time, reflecting broad-based strength in the US Dollar [1]. In addition to geopolitical tensions, upbeat US ADP Employment Change and ISM Manufacturing PMI data for March provided additional support for the US Dollar [1].
While investors favored the US Dollar against the Japanese Yen, the Yen also traded higher against other peers due to its own safe-haven appeal amid concerns that the Iran conflict could persist [1].
Technical analysis indicates that USD/JPY remains bullish, holding above the 20-day Exponential Moving Average (EMA) near 158.70 and respecting an ascending parallel channel established since mid-March. The 14-day Relative Strength Index (RSI) around 56 signals positive momentum, with dips within the channel supported. Immediate support is seen at 159.00, with further support at 158.20 and 157.40. Resistance levels are at 159.80 and 160.70, with a daily close above 160.70 potentially confirming a fresh upside extension toward 161.50. Failure to break above 159.80 would keep USD/JPY in a consolidation phase within the broader uptrend [1].
CONCLUSION
USD/JPY's sharp recovery and bullish technical outlook are underpinned by renewed safe-haven demand for the US Dollar amid escalating US-Iran tensions and strong US economic data. The market impact is high, with both currencies benefiting from their safe-haven status, and further upside is possible if resistance levels are breached.