USD/JPY rises as JGB yields hit 25-year high amid bond selloff

Japanese government bond yields continue their aggressive selloff, with 10-year yields holding at 2.12%, marking the highest levels since 1999. The latest 10-year JGB auction showed solid demand with a bid-to-cover ratio of 3.30, yet selling pressure persists as investors adjust to the new yield environment. 30-year yields surged an additional 3 basis points to 3.485%, reflecting expectations of sustained Bank of Japan policy normalization. The widening yield differential between US Treasuries and JGBs is reducing the yen's appeal as a funding currency, supporting USD/JPY above 157.00. Technical indicators suggest immediate resistance at 157.80, with support established at 156.50. Rising Japanese yields signal the BOJ's gradual shift away from ultra-loose monetary policy, potentially marking a structural change in global carry trade dynamics. Traders should monitor upcoming BOJ communications for further policy guidance.