USD/JPY moved down towards 156.60 on Friday as demand for the Japanese Yen rose during heightened Middle East tensions. Fox News reported further US airstrikes on empty tankers trying to break a blockade, while Iran said it would respond “with full force” to any aggression or provocation.
The pair traded near 156.63, with broader market moves described as muted and the US Dollar near weekly lows. US Nonfarm Payrolls rose by 115K in April versus expectations of 62K, the Unemployment Rate stayed at 4.3%, and Average Hourly Earnings increased by 0.2% month on month.
Technical Levels And Momentum
In technical terms, the four-hour chart showed USD/JPY below the 20-period SMA at 156.77 and the 100-period SMA at 158.39. RSI was about 44, with resistance levels listed at 156.63, 156.71 and 156.82, and support at 156.44.
The analysis note stated that the technical section was produced with help from an AI tool.
We are seeing a familiar pattern develop, reminding us of the situation back in April of 2025. Last year, escalating Middle East tensions drove flows into the safe-haven Yen, pushing USD/JPY down even as the US jobs report beat expectations with 115,000 new payrolls. The key then, as it is now, was the soft wage growth data which limited broad US Dollar strength.
As of today, May 9, 2026, while geopolitical tensions have moderated since last year’s flare-ups, the market remains sensitive to any new developments. The most recent US jobs report for April 2026 showed a healthier 185,000 jobs were added, but with the latest CPI inflation data holding firm at 3.4%, the Federal Reserve’s policy path is still cloudy. This underlying uncertainty continues to make the Yen an attractive short-term haven during periods of risk aversion.
Options Positioning And Risk Management
For derivative traders, this environment suggests that buying put options on USD/JPY could be a prudent strategy over the next few weeks. This approach provides downside protection against a sudden drop caused by either geopolitical jitters or signs of a slowing US economy. It allows us to define our risk while maintaining exposure to a potential move lower, possibly targeting the 155.00 psychological level.
We can see that market fear, as measured by the CBOE Volatility Index (VIX), is currently subdued at 14.5, which is significantly lower than the spikes we saw during the conflicts in 2025. This relative calm means option premiums are not excessively high, offering a cost-effective window to establish defensive positions. Waiting for volatility to rise will only make these hedges more expensive.
We must not forget the lessons from the 2024-2025 period, when Japanese authorities repeatedly intervened in the currency markets to support the Yen. The threat of intervention acts as a ceiling for USD/JPY, making outright long positions particularly risky without a clear exit plan. This risk reinforces the case for strategies that profit from either a sideways consolidation or a move lower.
Looking at the technicals from last year, the pair’s struggle below key moving averages was a clear signal of weakening momentum. We should therefore consider using any rallies toward significant resistance levels, such as 158.00, as opportunities to sell call spreads. This strategy would profit if the pair fails to break higher, aligning with the view that upside is capped by intervention risk and uncertain economic data.
