USD/JPY erases 200-pip surge as risk sentiment shifts dramatically

USD/JPY has reversed a massive 200-pip intraday gain, falling back to opening levels near 155.20 in volatile trading conditions. The pair initially spiked to 157.20 on heightened Middle East tensions and safe-haven dollar demand, but completely retraced as geopolitical risks subsided. The dramatic reversal reflects rapidly shifting market sentiment, with traders abandoning defensive positions after diplomatic signals emerged. Japanese yen strength accelerated across all major pairs as risk-off positioning unwound. The move was exacerbated by thin liquidity conditions and algorithmic trading, creating extreme volatility rarely seen in major currency pairs. Technical analysis shows the pair failed to hold above the 157.00 resistance level, triggering stop-loss orders that accelerated the decline. Support is now seen at 155.00, with the 200-day moving average at 154.80 providing additional downside protection. Traders should expect continued volatility as markets digest geopolitical developments.