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The Japanese Yen drifted lower against the US Dollar on Tuesday, with the USD/JPY pair holding modest gains around the 159.60 region. The pair has successfully recovered ground following a recent sharp pullback and is once again grinding back toward the upper boundary of its recent trading range. The moves come as the US Dollar continues to attract safe-haven flows, supported by underlying market uncertainty and solid interest rate differentials between the United States and Japan. For currency markets, the ongoing weakness in the Yen reflects persistent pressure on Japan's central bank to address the stark yield divergence with the Federal Reserve. Although Japanese authorities have repeatedly warned against excessive currency volatility, market participants continue to buy the US Dollar on dips. Traders are keeping a close watch on potential intervention thresholds, as approaching the key 160.00 psychological level has historically triggered official warnings and market intervention risks from Tokyo. Looking ahead, market participants will be closely monitoring upcoming economic data releases from both the US and Japan, as well as comments from central bank officials. Key technical levels to watch for USD/JPY include the 160.00 resistance mark and lower support levels around 158.50. Until there is a fundamental shift in Bank of Japan policy or a broader decline in US yields, the path of least resistance for the pair appears to remain tilted toward the upside.
