USD/JPY surges as JGB yields hit 16-year highs on BOJ rate hike expectations

USD/JPY has jumped 0.8% to 157.20 as Japanese government bond yields surged following the Bank of Japan's policy meeting. The 2-year JGB yield spiked to 0.91%, its highest level since 2008, while 5-year yields reached 1.20%, also a 16-year high. The sharp move reflects market positioning for an imminent BOJ rate hike after board members Takata and Tamura dissented in favor of a 25 basis point increase, though the majority voted 7-2 to maintain current rates. The widening Japan-US yield differential continues to pressure the yen, with the 10-year spread now exceeding 350 basis points. Technical indicators show USD/JPY breaking above the 157.00 resistance level, with next targets at 157.50 and 158.00. The dramatic shift in JGB yields suggests traders are pricing in multiple rate hikes over coming quarters, potentially marking a significant policy shift for the BOJ after years of ultra-loose monetary policy.