The USD/JPY pair remained stable on Tuesday as markets balanced the immediate risks of potential US-Iran military escalation with broader economic concerns. Early gains in the USD were offset by a slight decline in the Greenback, reflecting uncertainty over energy supply disruptions and geopolitical tensions. Analysts noted that the yen, traditionally a safe-haven currency, failed to find strong support due to mixed signals from central bank policies and the absence of concrete developments in the US-Iran standoff. For traders, the flat movement highlights the delicate equilibrium between risk-off and risk-on sentiment. Energy markets remain volatile as the threat of sanctions or military action against Iran could disrupt oil flows, impacting global prices. Meanwhile, the USD's performance is closely tied to Federal Reserve policy expectations, with investors monitoring inflation data and central bank statements for clues on future rate decisions. Looking ahead, investors should watch for updates on US-Iran negotiations, OPEC+ production decisions, and the Fed's stance on inflation. Any escalation in Middle East tensions could trigger a flight to safety, boosting the yen. Conversely, a de-escalation might favor riskier assets. Key levels to monitor include USD/JPY's 105.00 psychological barrier and 104.50 support.

Read full article from source ↗