USD/JPY plunges 150 pips as Middle East tensions ease, oil drops

USD/JPY has tumbled sharply from 148.00 to 144.60, marking a dramatic 150-pip decline (-2.3%) in just 24 hours. The pair's steep reversal reflects broad US dollar weakness triggered by easing Middle East tensions and a significant drop in oil prices, which reduces inflationary pressures. The de-escalation between Israel and Iran has prompted investors to unwind safe-haven positions, while lower energy costs give the Federal Reserve more flexibility to cut rates if employment data weakens. Technical analysis shows the pair has completely retraced gains made during the initial Israel-Iran conflict escalation. Immediate support lies at 144.00, with further downside potential toward 143.50 if peace momentum continues. The rapid unwinding of geopolitical risk premium suggests traders are repositioning for a more dovish Fed stance, particularly if upcoming jobs data disappoints and inflation remains subdued.