USD/JPY reverses lower as geopolitical de-escalation hits dollar

USD/JPY continues its downward trajectory as external factors significantly reduce support for the US dollar. The pair's decline accelerates amid improving Middle East stability and corresponding drops in oil prices, which ease inflation concerns globally. Market participants are reassessing Federal Reserve rate expectations, with reduced geopolitical risk allowing for potential monetary policy flexibility. The dollar index has weakened across the board as safe-haven demand evaporates. Technical indicators suggest further downside momentum, with the pair breaking below key support levels established during the recent risk-on period. Traders are monitoring whether the peace dividend will persist, as sustained de-escalation could trigger additional dollar selling. The yen's relative strength reflects both unwinding of carry trades and Japan's reduced energy import costs from lower oil prices, creating a dual pressure point for USD/JPY bears.