USD/JPY Rallies Sharply as Strong US Jobs Data Revives Fed Hawkish Bets

USD/JPY marched decisively higher as markets repriced Federal Reserve rate expectations following stronger-than-anticipated US employment data. The pair extended its upward momentum as US Treasury yields climbed across the curve, with both 2-year and 10-year yields advancing on expectations that the Fed will maintain its restrictive policy stance for longer. The strong Non-Farm Payrolls report widened the monetary policy divergence between the hawkish Fed and the Bank of Japan, which continues its cautious approach to policy normalization. Rising VIX futures indicate growing market anxiety, though risk sentiment has not yet deteriorated enough to trigger safe-haven yen demand. The widening US-Japan yield differential remains the dominant driver for USD/JPY upside, with traders closely monitoring upcoming Fed commentary for confirmation of the higher-for-longer narrative. Near-term resistance levels tied to previous multi-month highs are now in focus, while any pullback toward recent breakout zones could attract dip buyers. Intervention risk from Japanese authorities remains a key tail risk for extended yen weakness.