USD/JPY Extends Rally on Fed-BoJ Divergence and Rising Oil Prices

USD/JPY continues its upward trajectory, driven by a combination of external dollar strength and domestic Japanese pressures that are keeping the yen on the defensive. The pair's advance is underpinned by the persistent interest rate differential between the Federal Reserve, which maintains a hawkish policy stance, and the Bank of Japan, which despite recent normalization steps remains far behind in the global tightening cycle. Rising crude oil prices, tracked via WTI futures, are adding to Japan's trade balance challenges as an energy-importing nation, further weighing on the yen. Domestic pressures including Japan's widening current account concerns and tepid wage growth data are compounding the bearish yen narrative. From a technical perspective, the pair is testing key resistance levels, with a sustained break higher potentially targeting multi-month highs. Support remains well-defined on pullbacks, suggesting dip-buying interest persists. Traders should watch upcoming BoJ commentary and US inflation data for catalysts that could accelerate or reverse the current trend.