Fundamental Overview

USD

The US dollar weakened broadly on Tuesday following reports suggesting an imminent US-Iran agreement. The decline began when Qatari mediators indicated that draft language for a potential US-Iran deal had been prepared.

Selling pressure intensified after US Treasury Secretary Bessent confirmed that an Iran deal could have been reached as early as yesterday and would have included the reopening of the Strait of Hormuz — a narrow shipping lane through which roughly a fifth of global daily oil consumption transits, making it one of the most strategically important energy chokepoints in the world.

The dollar's losses began to narrow late in the session, likely because the anticipated timeline for the deal passed without a formal announcement. Still, expectations of a deal are likely to keep the greenback under pressure unless geopolitical tensions escalate again.

The next major event for the dollar will be the US CPI report next week. The data is expected to be critical for the September FOMC decision and the Jackson Hole Symposium — the Kansas City Fed's annual gathering in Wyoming where policymakers have historically used keynote addresses to telegraph shifts in the policy outlook. A hotter-than-expected report would likely trigger a dollar rally as traders increase bets on further rate hikes. Conversely, a softer report should further diminish expectations of Fed tightening and add pressure on the currency.

JPY

On the Japanese yen side, the picture remains largely unchanged following last week's massive intervention — an operation in which Japanese authorities sold dollars and bought yen to slow the currency's depreciation. The most notable development came from US Treasury Secretary Bessent, whose remarks to CNBC hinted at a potentially faster pace of BoJ tightening.

Bessent stated that "it will require policy to follow up on the intervention" and added that the "US would not have joined if it was not optimistic about Japan policies." Separately, Japan's currency diplomat Mimura noted that he shared an understanding with the BoJ following the intervention, which could be another signal pointing toward faster rate hikes.

Overall, without a shift in fundamentals, interventions are likely to serve only as clearing events that allow market participants to rebuild positions at more favorable levels. A sustained trend change would likely require either a dovish repricing of Fed interest rate expectations or a faster pace of BoJ tightening.

USDJPY Technical Analysis

Daily Timeframe

On the daily chart, USDJPY is gradually recovering ground after the intervention and position squaring brought the pair toward the 155.00 level. The nearest key resistance stands around 160.50. If the price approaches that level, sellers may step in with defined risk above the resistance to position for a pullback toward the 155.00 handle. Buyers, meanwhile, will look for a breakout to extend bullish positioning into new highs.

4-Hour Timeframe

On the 4-hour chart, a minor resistance zone around 158.50 has rejected the price on several occasions. Sellers are expected to defend this level with defined risk above the resistance, targeting a drop back toward 155.00. Buyers, on the other hand, will seek a breakout to extend bullish bets toward the 160.50 resistance.

1-Hour Timeframe

On the 1-hour chart, a minor support zone sits around 157.20. On a pullback, buyers may step in near this support with defined risk below it to push toward new highs, while sellers will look for a breakdown to target a drop into the 155.00 handle. The red lines on the chart define the average daily range for the session.

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Today brings the latest US Jobless Claims figures. Tomorrow concludes the week with the release of the US Non-Farm Payrolls (NFP) report.