USD/JPY Tests Intervention Levels as Oil Retreats and Risk Mood Improves

USD/JPY continues to trade around intervention-sensitive levels as Japanese officials remain constrained in their response, while broader risk sentiment saw a modest improvement during the European session. WTI crude oil pulled back 1.5% from early highs following renewed geopolitical tensions, including a second attack on the UAE's Fujairah oil port that suspended oil loading operations. Trump's demand for allied support on the Strait of Hormuz added further uncertainty to energy markets. US equity futures held slightly higher, though analysts warned that danger lurks beneath the surface calm. China reaffirmed ongoing communication with the US ahead of Trump's visit, providing a marginal lift to sentiment. US and Japanese top diplomats are set for a phone conversation later today, which could influence USD/JPY direction. Traders should monitor intervention rhetoric closely, as any coordinated action from Japanese authorities could trigger sharp yen appreciation. The interplay between geopolitical oil risks and central bank positioning remains the key driver for near-term forex moves across major pairs.