USD/JPY Climbs as Yen Faces Pressure from Fiscal Concerns

The USD/JPY pair is on the rise as the US Dollar benefits from geopolitical uncertainties and elevated bond yields. Despite recent Fed rate hike bets receding, the USD Index (DXY) remains near its highest level since April 2025, supporting the pair's upward momentum. The Japanese Yen, however, faces pressure due to diminishing expectations of aggressive tightening by the Bank of Japan (BoJ).

BoJ Governor Ueda emphasized a gradual tightening path, focusing on anchoring inflation around 2%. His speech scored a 7.2/10, indicating steady policy communication. While underlying inflation is approaching 2%, market anxiety over Japan's fiscal policies and massive public debt continues to weigh on the JPY. Traders are cautious, awaiting further cues from the Fed's policy path and potential Japanese intervention to support the Yen.

Technically, the USD/JPY pair maintains a bullish bias above the 100-period SMA on the 4-hour chart. Spot prices are consolidating under the 61.8% Fibonacci retracement at 157.47, with key resistance at 158.73. Support levels include the 100-period SMA at 156.99 and deeper structural floors at 155.70 and 154.61.