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The USD/JPY currency pair is confronting a vital technical ceiling after making a strong recovery from last week's lows near 157.96. Having successfully climbed above the 100-hour moving average at 158.91, the pair is actively testing the key 200-hour moving average around 159.12. Fundamental support for the US Dollar is being sustained by wide US-Japan interest rate differentials and safe-haven flows tied to heightened US sanctions on Iran. From a technical trading perspective, maintaining momentum above the 200-hour moving average is essential for buyers to keep the short-term bullish bias intact. A confirmed close above 159.12 opens the pathway toward the 50% Fibonacci retracement level at 159.60, with subsequent upside targets at the 100-day moving average near 159.98 and psychological resistance around 160.00. Failure to sustain this breakout could result in a pullback toward support at 158.91 and 158.34. Traders must remain cautious of potential foreign exchange intervention by Japanese monetary authorities. Following joint US-Japan yen-buying operations earlier this year, any rapid depreciation of the Japanese Yen toward the 160.00 threshold heightens the risk of official market smoothing, which could trigger sharp upside resistance and swift reversals in the pair.
