USD/JPY weakens as BOJ's Ueda signals limited easing capacity

USD/JPY dropped 0.3% to 156.20 following Bank of Japan Governor Ueda's comments highlighting the central bank's constrained ability to support growth through rate cuts. This hawkish tilt surprised markets expecting continued ultra-loose policy, triggering immediate yen buying across the board. Ueda's remarks suggest the BOJ is increasingly concerned about the yen's weakness and its inflationary implications, potentially setting the stage for policy normalization. The statement comes amid Japan's core CPI holding above the BOJ's 2% target for 24 consecutive months. EUR/JPY and GBP/JPY also declined 0.4% and 0.5% respectively, confirming broad yen strength. Technical levels show USD/JPY support at 155.80 (50-day MA) with resistance at 157.00. Markets are now pricing in a 65% probability of BOJ action by September, up from 40% before Ueda's comments.