The USD/JPY pair failed to break above the 159.00 mark during the Asian session on Thursday, stalling the previous day's modest recovery from sub-158.00 levels, which represented a nearly three-week low. Spot prices traded near the 158.70-158.75 region, up around 0.10% for the day [1][3]. This movement coincided with Bank of Japan (BoJ) Governor Kazuo Ueda's statement that real interest rates remain clearly negative, maintaining accommodative financial conditions and supporting a moderate increase in capital expenditure [3].
The US Dollar's relative strength against the Japanese Yen was attributed to ongoing risks in the Middle East, particularly disruptions to shipping traffic through the Strait of Hormuz and accusations of ceasefire violations between the US and Iran. Despite a temporary truce, escalation risks persist, contributing to cautious sentiment among USD/JPY bulls [1]. Technical analysis indicated that USD/JPY held above the 158.25-158.20 horizontal support, coinciding with the 200-period EMA, suggesting a constructive near-term bias. However, a negative MACD reading hinted at fading momentum unless prices accelerate decisively away from the 158.22 floor [1].
Meanwhile, the USD/INR pair rebounded to near 92.65 from a three-week low of 92.20, following the US-Iran ceasefire announcement. The Indian Rupee weakened due to doubts over the sustainability of the ceasefire and continued outflows of foreign funds from the Indian stock market. On Wednesday, Foreign Institutional Investors (FIIs) sold Rs. 2,811.97 crore, though this was lower than the average selling seen earlier in April [2]. The Reserve Bank of India (RBI) left its Repo Rate unchanged at 5.25% for the second consecutive time, with Governor Sanjay Malhotra warning that elevated energy prices could prompt imported inflation and widen the current account deficit [2].
Technical indicators for USD/INR showed the pair trading higher at around 92.60 but remaining below the 20-day EMA at 92.90, suggesting that upside attempts are capped for now [2]. The broader market reaction to the USD/JPY pair was modest, with a 0.10% gain on the day, reflecting cautious optimism amid persistent geopolitical uncertainties and dovish central bank outlooks [1][3].
CONCLUSION
The USD/JPY pair remains supported by ongoing Middle East tensions and the Bank of Japan's accommodative stance, but upside momentum is limited by technical resistance and cautious sentiment. The USD/INR pair also rebounded amid ceasefire uncertainty, with continued foreign fund outflows and unchanged RBI policy weighing on the Indian Rupee. Overall, market reactions are muted, reflecting persistent geopolitical risks and central bank caution.