Risk sentiment improves as USD/JPY tests resistance, gold retreats

Improved risk appetite pushed USD/JPY toward the 157.00 resistance level as traders reduced safe-haven positions following stabilization in equity markets. The Dow Jones recovered from recent lows, prompting a pullback in extreme bullish positioning. Gold spot prices declined 0.8% to $2,740 per ounce as the dollar strengthened and risk-on sentiment returned. AUD/USD benefited from the risk-positive environment, gaining 0.4% to 0.6390. The S&P 500's technical bounce from key support levels encouraged carry trade positioning, with high-yielding currencies outperforming. Japanese yen weakness reflects ongoing Bank of Japan policy divergence with other major central banks. Near-term USD/JPY resistance sits at 157.50, with support at 156.20. The shift in market dynamics suggests traders are becoming more selective in their safe-haven allocations, favoring tactical opportunities over defensive positioning.