FUNDAMENTAL OVERVIEWUSD:The US dollar strengthened abit yesterday as traders turned more cautious heading into the expected US-Irantalks in Islamabad and the ceasefire deadline. The markets got scared at some pointas it looked like the Islamabad talks were dead on arrival with Iran refusingto participate until the US blockade in the Strait of Hormuz was lifted. The sentiment improvedthough after Trump extended the ceasefire deadline (unsurprisingly) to allowmore time for Tehran to put forward a proposal to end the war. There's nodeadline for this latest extension, so we might just get stuck in this newsituation until the bombs start dropping again or they finally reach a deal. This morning, the sentimentis a bit more positive after Tasnimreported thatIran received 'some sign' the US is ready to break the blockade which is givingtraders hope that the talks are going to happen soon. The price action continuesto be driven by US-Iran headlines, and this is unlikely to change until we getan official resolution. For now, the greenback will likely remain underpressure amid the optimistic expectations.JPY:On the JPY side, thecurrency has been mostly driven by US dollar strength and weakness as Japanesemacro conditions continue to point towards a neutral policy. Yesterday, we gotseveral reportssuggesting the BoJ is going to keep interest rates unchanged at theupcoming meeting. This shouldn’t be a surprise at all given that inflation inJapan has been gradually easing with most metrics being near or below the 2%target. Moreover, the US-Iran warhasn’t only put upward pressure on inflation but also downward pressure ongrowth. The end of the war would certainly be good news for the economy andshould lift business sentiment which might eventually translate into favourableconditions for a rate hike, but for now we haven’t got an official resolution.The BoJ will want to waitfor the end of the war and let things settle before considering a rate hike. Ifthe war ends and economic data picks up, they might lay the groundwork for arate hike in June. USDJPY TECHNICALANALYSIS – DAILY TIMEFRAMEOn the daily chart, we cansee that USDJPY continues to consolidatebetween the 158.00 support and the 160.00 handle. If the price pulls back intothe support again, we can expect the buyers to step in with a defined risk belowit to keep targeting the 162.00 level next. The sellers, on the other hand,will look for a break lower to open the door for a move into the major upward trendlinearound the 155.00 handle.USDJPY TECHNICALANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, wehave a downward trendline acting as resistance. The price probed above thetrendline yesterday on some negative headlines but eventually fell back belowit as Trump extended the ceasefire. The sellers are likely to pile in aroundthese levels with a defined risk above the trendline to target the 158.00support zone. The buyers, on the other hand, will want the price to breakhigher again to position for a rally into the 162.00 level next.USDJPY TECHNICALANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we havea minor upward trendline defining the pullback into the downward trendline. Thebuyers will likely continue to lean on it to keep pushing into new highs, whilethe sellers will look for a break lower to increase the bearish bets into the158.00 support. The red lines define the average daily range for today. UPCOMING CATALYSTSTomorrow we get the latest US Jobless Claims figures and the US PMIs. OnFriday, we conclude the week with the Japanese CPI report. The focus remains onUS-Iran headlines. This article was written by Giuseppe Dellamotta at investinglive.com.