USD/JPY may encounter resistance as market participants increasingly anticipate further rate hikes from the Bank of Japan (BoJ). Bloomberg reports that overnight index swaps fully price in a BoJ rate hike by September, with a 50% chance of an earlier move by June. Traders are also closely watching key Japanese economic data, including industrial production, retail sales, and Tokyo inflation, set for release on Friday. These reports could provide valuable insights into the BoJ’s policy outlook.

Meanwhile, the US Dollar (USD) strengthens alongside rising US Treasury yields. The US Dollar Index (DXY) approaches 106.50, with 2-year and 10-year US Treasury yields climbing to 4.11% and 4.32%, respectively.

Geopolitical and trade developments continue to influence sentiment. US President Donald Trump has ordered an investigation into potential tariffs on copper imports and reaffirmed that tariffs on Canada and Mexico will proceed once the current delay expires next week. On the monetary policy front, Richmond Fed President Thomas Barkin signaled expectations for a further decline in PCE inflation but maintained a cautious stance on rate adjustments.

Trade Idea:
A break below 149.50 could push USD/JPY toward 148.80, while a sustained move above 150.20 may trigger a rally toward 150.80. Stop-loss: 151.00.