USD/JPY under pressure as Nikkei hits record, yen strengthens

USD/JPY declined 0.4% to 142.85 during Asian trading as Japan's Nikkei 225 index reached another all-time high, boosting investor confidence in Japanese assets and strengthening the yen. The record equity performance reflects growing optimism about Japan's economic recovery and corporate earnings outlook, attracting foreign capital inflows that support yen demand. Mixed performance across other Asian equity markets highlighted Japan's relative outperformance, with Shanghai Composite down 0.2% while Korea's KOSPI gained 0.3%. The yen's strength extended against other major currencies, with EUR/JPY falling to 158.20 and GBP/JPY dropping to 181.45. Technical indicators show USD/JPY testing support at 142.80, with a break below potentially opening the path to 142.00. Resistance sits at 143.50, coinciding with the 50-day moving average. Traders are monitoring upcoming BOJ policy signals for further yen direction.