USD/JPY Nears 159 as Japan GDP Beats Forecasts but Geopolitical Risks Loom

USD/JPY is approaching the critical 159 level as markets digest Japan's stronger-than-expected Q1 GDP growth of 2.1%, which surpassed consensus forecasts and underscored a moderate economic recovery. Economy Minister Kiuchi acknowledged the positive trajectory, citing improvements in job market conditions and the supportive role of government policy measures as key factors sustaining the recovery. However, he tempered optimism with a clear warning about potential fallout from escalating Middle East tensions, particularly the risk of an Iran-related energy shock that could disrupt oil supply chains and undermine Japan's energy-dependent economy. For USD/JPY traders, the pair's approach toward 159 places it near levels that previously triggered verbal intervention from Japanese officials, making this a key resistance zone to monitor. Rising crude oil prices tied to geopolitical uncertainty could weigh on Japan's trade balance and current account, potentially adding further upward pressure on the pair. Traders should watch for any BOJ commentary on yen weakness and remain alert to developments in the Middle East that could trigger sharp volatility.