USD/JPY faces pressure as Japan's Katayama hints against BOJ rate hikes

USD/JPY is experiencing downward pressure following comments from Japan's Finance Minister Katayama suggesting the nation hasn't fully exited deflation, implying the Bank of Japan should maintain its accommodative stance. The minister emphasized the need for continued BOJ-government cooperation while notably avoiding any direct comment on interest rates, stating monetary policy specifics remain the BOJ's decision. This dovish signal comes as markets had been pricing in potential BOJ policy normalization. The remarks effectively push back against expectations of imminent rate hikes, potentially weakening the yen's recent recovery momentum. Technical indicators show USD/JPY defending the 149.50 support level, with resistance at 150.80. Traders should monitor upcoming BOJ communications for policy clarity, as any deviation from ultra-loose policy could trigger significant yen volatility. The finance minister's stance aligns with supporting Prime Minister candidate Takaichi's economic policies, suggesting continued fiscal-monetary coordination.