USD/JPY Breaks Above 159 as Peace Talks Collapse Boosts Dollar

USD/JPY has surged back above the 159.00 level as the breakdown in peace talks fuels a broad risk-off shift, driving demand for the US dollar against the Japanese yen. The pair's recovery reflects deteriorating geopolitical sentiment after diplomatic negotiations faltered, removing a key source of optimism that had briefly supported risk assets earlier in the week. Rising crude oil prices, tracked via WTI futures, are adding to inflationary concerns and supporting the dollar's strength through expectations of a more hawkish Federal Reserve stance. The US Dollar Index futures are firming alongside the move, underscoring broad-based greenback demand. Technically, the 159.00 level now serves as near-term support, with the psychologically significant 160.00 handle acting as key resistance. A sustained move above 159.50 could open the path toward retesting 160.00. Traders should monitor further geopolitical headlines and upcoming BOJ policy signals, as any shift in Japanese monetary policy expectations could introduce sharp two-way volatility in the pair.