No important events are expected today.

The pair is trading above 159.00, remaining close to the zone where expectations of action from the Japanese authorities have previously intensified. The Dollar is supported by high US inflation and the Fed’s cautious stance, but further growth of the pair is restrained by the risk of Japanese intervention and reports of easing tensions between the US and Iran.

The Yen remains weak due to softer inflation data in Tokyo, which reduced market confidence in an imminent rate hike by the Bank of Japan. However, the proximity of USD/JPY to 160.00 makes buying the Dollar less comfortable: market participants remember that such levels were previously accompanied by stern warnings from Japanese officials and sharp movements in the pair.

For today, the baseline scenario assumes a cautious decline of USD/JPY from current levels. If the Dollar continues to lose support following reports of a truce, and investors begin to reduce risk ahead of a possible reaction from Japan, the Yen could recover some ground. Therefore, selling looks preferable, especially while maintaining a cautious attitude toward the 160.00 zone.

Recommendations: SELL 159.35, SL 159.65, TP 158.45.