USD/JPY Stabilizes at 155.50; Domestic Weakness Persists

USD/JPY has halted its recent decline, consolidating around 155.50 after dropping from last week's high of 156.80. Despite the pause, domestic Japanese signals remain bearish with the Bank of Japan maintaining its ultra-loose monetary policy stance. Japan's trade deficit widened to ¥1.22 trillion in May, exceeding forecasts and highlighting ongoing economic challenges. The yen's weakness persists due to the significant interest rate differential between the Fed and BoJ, with US 10-year yields at 4.25% versus Japan's 0.95%. Technical indicators suggest USD/JPY has found temporary support at 155.20, with resistance at 156.00. However, momentum indicators remain negative, with the RSI at 42 signaling further downside potential. A break below 155.00 could accelerate losses toward 154.50, while recovery above 156.00 would neutralize immediate bearish pressure.