USD/JPY Faces Yen Strength as Oil Shock Fades and JGB Yields Rise

USD/JPY is coming under renewed downside pressure as the easing of the recent oil price shock removes a key headwind for the Japanese yen. With crude oil prices retreating sharply, Japan's terms of trade are improving, reducing the energy import burden that had previously weighed on the yen. Simultaneously, Japanese government bond (JGB) 10-year yields continue to trend higher, reflecting shifting expectations around Bank of Japan monetary policy normalization and providing additional support for yen appreciation. The combination of falling oil prices and rising domestic yields creates a favorable backdrop for JPY strength against the US dollar. From a technical perspective, USD/JPY faces key support levels that, if breached, could open the door to a deeper corrective move. Resistance overhead remains firm following the recent consolidation phase. Traders should watch upcoming US economic data releases and any further developments in global energy markets, as both factors will be critical in determining whether USD/JPY extends its decline or finds a floor near current levels.