USD/JPY faces pressure as Japan tightens foreign investment screening

USD/JPY is experiencing downward pressure as Japan announces plans to revamp its foreign investment screening law by 2026, signaling a more assertive stance on capital flows and national security. The revision of the Foreign Exchange and Foreign Trade Act aims to sharpen oversight and close existing loopholes, potentially affecting foreign capital inflows into Japanese markets. The government plans to narrow IT-sector reviews to critical cybersecurity areas while considering a U.S.-style CFIUS body for better investment coordination across ministries. This regulatory tightening comes after foreign investment filings surged following the 2019 threshold reduction. The move could strengthen the yen by reducing foreign portfolio flows and increasing risk perception around Japanese investments. Traders should monitor the 149.50 support level as markets digest these regulatory changes, with potential for yen appreciation if foreign investors reassess their Japanese exposure amid stricter screening requirements.