USD/JPY bounces back above 159.00 but remains within previous ranges

The US Dollar (USD) posts moderate gains against the Japanese Yen (JPY) on Tuesday, with price action returning above 159.00 after bouncing up from 157.59 lows on Friday. The pair, however, remains bouncing back and forth within a broadly 150-pip range, from 158.50 to the key 160.00 level.

A Reuters report released earlier on Tuesday, hinting at steady interest rates at the Bank of Japan’s (BOJ) monetary policy meeting next week, has added pressure on the Yen. Various sources related to the bank indicated to the news agency that policymakers might wait for more data to assess the economic consequences of the war in the Middle East.

Meanwhile, the US Dollar Index, which measures the value of the Greenback against a basket of six majors, posts minor gains on Tuesday, as investors bid their time, awaiting the second round of talks between the US and Iran and the testimony of the recently appointed Federal Reserve (Fed) Chair Kevin Warsh ahead of the US Senate. 

On the geopolitical front, the Wall Street Journal confirmed that Tehran will finally send delegates to Pakistan for negotiations after threatening to pull out of the peace process. US sources have been sending mixed messages, though markets remain hopeful that some progress is possible. This is keeping the safe-haven US Dollar at relatively low levels.

Technical analysts at the UOB Bank expect the pair to remain trading sideways in the near-term: “We are not able to derive much from the volatile price action. (...) For the time being, USD could trade between 157.55 and 160.50.”