The USD/JPY pair is attracting buyers who are using the recent decline to enter the market after the drop to the 155.50 level. The pair is attempting to break above the round level of 157.00; however, this momentum has not been sustained, so market participants should remain cautious before opening positions in anticipation of a continued confident recovery that began on Friday. Escalating concerns about further conflict in the Middle East are supporting the U.S. dollar, adding strength to the USD/JPY pair.

U.S. President Donald Trump announced the launch of "Project Freedom," under which the United States will begin escorting neutral vessels through the Strait of Hormuz. Trump emphasized that if obstacles arise, the U.S. will act using force. In response, Ibrahim Azizi, head of Iran's parliamentary commission on national security and foreign policy, warned that any U.S. intervention in this strategically important waterway would be considered a violation of the ceasefire.

At the same time, Minneapolis Federal Reserve President Neel Kashkari stated on Sunday that the prolonged conflict with Iran creates inflation risks and may negatively impact the economy. He did not rule out the possibility of interest rate hikes given the uncertainty surrounding the conflict. These comments are supporting the U.S. dollar and contributing to the rise of the USD/JPY pair.

However, reports of possible currency interventions by Japanese authorities in May—when around 5.4 trillion yen (approximately $34.5 billion) was spent to support the weakening yen—may discourage bears from opening new positions against the Japanese currency, potentially limiting further growth of the pair.

As for the outlook, no significant economic data releases from the U.S. are expected on Monday that could influence the market; therefore, the fate of the dollar and the USD/JPY pair will depend entirely on new developments related to the Middle East crisis.

Nevertheless, given the current fundamental backdrop, it is prudent to wait for confirmation in the form of active buying before concluding that a short-term price bottom has formed and opening long positions.

From a technical perspective, oscillators remain negative, confirming the weakness of bulls. Bulls need to secure a position above 157.00 and break the 50-day SMA to gain a chance of taking control.