USD Pressured as US Debt Tops GDP; Citi Brings Forward BoJ Rate Hike Forecast

The US dollar faced headwinds on Thursday after data confirmed that US national debt has surpassed the nation's total Gross Domestic Product, reaching a debt-to-GDP ratio not seen since the aftermath of World War II. This milestone raises long-term fiscal sustainability concerns and could weigh on dollar sentiment as investors reassess the trajectory of US government borrowing. Separately, Citigroup accelerated its forecast for the next Bank of Japan rate hike, a development that is bullish for the yen and bearish for USD/JPY. The combination of deteriorating US fiscal fundamentals and expectations for tighter Japanese monetary policy creates a dual headwind for the dollar-yen pair. USD/JPY faces immediate support near 152.50, with a break lower potentially targeting the 151.00 region. Resistance holds at 154.00. The fiscal concerns also indirectly pressure EUR/USD higher as investors diversify away from dollar-denominated assets. Traders should monitor upcoming Treasury auction results and BoJ communications for confirmation of these shifting dynamics, as both factors could amplify directional moves in major pairs.