USD/JPY Risks Tilt Lower as Yields Fall and Growth Fears Rise

USD/JPY’s recent breakout was driven by domestic headlines questioning how fast the BOJ would raise rates, but that move is already fading. BOJ tightening expectations remain in place after Ueda signalled hikes are still possible in March or April, and Tokyo inflation came in slightly stronger.

Yields are falling and rate differentials could start to narrow. That creates risk for yen funded carry trades. If global growth slows and yield gaps shrink, the yen could strengthen, especially after strong rallies in risk assets and yen crosses.

Technically, USD/JPY has stalled below 156.83 and momentum is fading. Key support sits around 155.65 and 155.35, with a break opening the door toward 155 and 154. On the upside, 156 to 156.83 remains resistance.

USD/JPY Daily Chart

In short, while BOJ policy remains important, growing global growth concerns and bond market signals suggest downside risks for USD/JPY may be building, especially if upcoming US jobs data confirms a slowdown.