USD/JPY Forecast: BOJ Struggles to Defend Yen and JGB Markets

USD/JPY continues to face upward pressure as analysts question the Bank of Japan's ability to sustainably defend both the yen and the Japanese government bond market simultaneously. The pair remains elevated as the fundamental divergence between the Federal Reserve's relatively hawkish stance and the BOJ's ultra-accommodative policy framework persists. Rising JGB yields have forced the BOJ into repeated intervention in the bond market, draining resources and credibility that could otherwise be deployed to support the yen through currency intervention. The structural challenge for the BOJ lies in the conflicting objectives: defending JGB price stability requires dovish action, while supporting the yen demands tighter monetary conditions. Traders are closely watching the BOJ's yield curve control adjustments and any signals of policy normalization. On the technical front, USD/JPY faces resistance at recent highs, while support is anchored around key moving averages. The outlook suggests continued yen vulnerability unless the BOJ signals a meaningful shift toward tightening, making dip-buying in USD/JPY a favored strategy among institutional traders.