USD/JPY Eyes Bond Volatility: 3 Key Charts for 2026 Fixed Income

USD/JPY faces increasing pressure as bond market volatility signals significant shifts ahead for 2026 fixed income markets. The ICE BofAML MOVE Index, tracking Treasury volatility, has surged to multi-month highs, indicating heightened uncertainty in rate expectations. Japanese government bond yields remain near decade highs while US Treasury yields show mixed signals, creating divergent monetary policy expectations between the Fed and BoJ. The iShares Core U.S. Aggregate Bond ETF has declined 2.1% this quarter, reflecting broader fixed income weakness. Technical indicators suggest USD/JPY could test the 150.00 psychological level if bond volatility persists, with immediate resistance at 152.50. The S&P 500's correlation with bond yields remains elevated at 0.75, suggesting continued risk asset sensitivity to fixed income movements. Traders should monitor upcoming Fed and BoJ policy meetings for directional cues on the pair.