USD/JPY Rallies on BoJ Rate Repricing as Nikkei Eyes Record Highs

USD/JPY is advancing sharply as markets reprice Bank of Japan rate hike expectations, sending the yen lower against the dollar while the Nikkei 225 index eyes record territory. The repricing in Japan's 2-year bond yields reflects reduced expectations for near-term BoJ tightening, widening the US-Japan rate differential in favor of the dollar. This fundamental shift has provided strong tailwinds for USD/JPY, with the pair breaking through key resistance levels. The inverse correlation between the yen and Japanese equities remains intact, as a weaker currency supports export-heavy Nikkei components. Traders should monitor the 150.00-151.00 resistance zone as a critical technical area, while support is forming near the 148.50 level. Any hawkish surprises from BoJ officials or stronger-than-expected Japanese inflation data could trigger a sharp reversal. However, the current momentum favors further upside in USD/JPY as long as the rate repricing narrative persists. Near-term catalysts include US consumer confidence data and Japanese CPI figures.