FUNDAMENTAL OVERVIEWUSD:The US dollar has been mostly rangebound for the past months with bouts ofweakness on positive US-Iran headlines, and strength on negative developments.This week, the greenback has been supported by renewed tensions in the MiddleEast as US and Iran exchanged fire once again, with Iran even attacking USbases in the Gulf. The most important thing is the fact that the negotiating stalematecontinues to extend, and the reopening of the Strait of Hormuz is movingfurther and further away compared to previous expectations. The signal is that nobody wants to restart the war, which is good, but theStrait of Hormuz will remain closed until there’s a deal. Trump looks in nohurry whatsoever with the stock market trading at record highs and he recentlyeven said that the Strait could remain closed through Labor Day, which is inSeptember. That’s going to keep oil prices persistently elevated. We are approaching the June FOMC meeting and it’s now almost assured thatthe Fed is going to abandon the easing bias. If nothing changes before then, wemight get a more hawkish than expected decision which could reverberate acrossmarkets and give the US dollar a strong boost.Therefore, in the short-term, a resolution and the reopening of the Straitwill likely weigh on the greenback on falling oil prices and increased rate cutbets. But if the Strait remains closed for longer and oil prices stay elevated,the risk of the Fed being forced to hike anyway increases, which should keepsupporting the greenback.JPY:On the JPY side, BoJGovernor Ueda yesterday delivered slightly more hawkish comments as he stresseda few times that acting too late on inflation could eventually require astronger response and risk a significant economic slowdown. Today, we got a Reutersreport citing three sources that the BoJ is expected to hike rates at theupcoming meeting in June barring sharp escalation in the Middle East. Thereport also added that the central bank is also leaning towards pausing orslowing the pace of its bond tapering program for the upcoming fiscal year. The Japanese yen hasn’treacted to the news because the market was already pricing in 70% chance of arate hike, which has now rose to 82%, and the more dovish tapering plan removessome of the hawkishness from the decision. USDJPY TECHNICALANALYSIS – DAILY TIMEFRAMEOn the daily chart, we cansee that USDJPY continues to slowly edgehigher and it’s getting closer to erase the entire drop since April. Thenatural target should be the cycle high around the 162.00 handle. If we getthere, we can expect the sellers to step in with a defined risk above the cyclehigh to position for a correction into the major trendline. The buyers, on theother hand, will look for a break higher to increase the bullish bets into newhighs. USDJPY TECHNICALANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we havea trendline defining the bullish momentum. The buyers will likely continue tolean on the trendline with a defined risk below it to keep pushing into newhighs. The sellers, on the other hand, will look for a break lower to pile in fora drop into the 158.00 support zone.USDJPY TECHNICALANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, there’snot much we can add here as from a risk management perspective, the buyers willhave a better risk to reward setup around the trendline, while the sellers willneed to wait for a break to open the door for new lows. The red lines define theaverage daily range for today. UPCOMING CATALYSTSToday, we get the latest US Jobless Claims figures. Tomorrow, we conclude theweek with the Japanese wage data and the US NFP report. This article was written by Giuseppe Dellamotta at investinglive.com.