On Tuesday, the USD/JPY pair is trying to attract buyers on dips: quotes sit below the round 158.00 level but have already partially recouped losses from the previous session. At the same time, the instrument still trades within the range formed in early October, which calls for a cautious approach when opening large directional positions.

The yen's weakness was triggered by weak domestic economic indicators that could complicate the Bank of Japan's plans for further monetary tightening. According to Japan's Ministry of Internal Affairs and Communications, household consumption fell 6.8% year-on-year in September — the tenth consecutive monthly decline and the deepest drop since September 2020. An additional driver of the USD/JPY rise was a modest strengthening of the US dollar.

US President Donald Trump reported positive progress in resolving the Iran conflict, noting a low probability of renewed strikes and effectively declaring the conflict over. However, Mohsen Rezaei, secretary of Iran's Supreme National Security Council, described reports of active talks as "fake news" and again stated that Washington must meet seven Iranian conditions to reach a settlement. This preserves the geopolitical risk premium and supports the US dollar, which is traditionally viewed as a safe-haven asset.

Moreover, according to CME Group's FedWatch tool, traders price in better than an 80% probability of a Federal Reserve rate hike. This provides additional support to the US currency as market participants await fresh US consumer-inflation data for new signals on the Fed's policy path.

At the same time, expectations of a more hawkish Bank of Japan combined with the risk of currency intervention can limit the yen's weakening and restrain further rises in USD/JPY. In particular, the Summary of Opinions following the Bank of Japan's October meeting noted that some board members favored accelerating the pace of rate increases because core inflation has reached the central bank's 2% target. Therefore, before opening aggressive long positions in USD/JPY, it is advisable to wait for confirming signals — a sustained move above the 100- and 200-day SMAs.

Conversely, for a deeper decline to develop, the pair needs to consolidate below 157.25, where the 50-day SMA runs.

At present, USD/JPY's rise is capped by the 100-day EMA. Moreover, current prices remain confined to the specified range, making any rally attempts vulnerable to seller pressure. The overall technical picture indicates the market is still in a corrective phase while the price stays below that barrier. The nearest significant resistance is formed by the 100- and 200-day SMAs; to ease the current bearish bias and create conditions for a more confident recovery, the pair needs to decisively clear that zone. Oscillators are positive but near neutral, signaling ongoing sideways movement within this range. The 200-day EMA provides the nearest support.