The USD/JPY currency pair is trading near 149.40, with potential resistance expected due to anticipated interest rate hikes by the Bank of Japan. Traders are awaiting key Japanese economic reports on industrial production, retail sales, and Tokyo inflation, which are scheduled for release on Friday.

The Bank of Japan is projected to increase rates to 0.75% this year, with a full rate hike priced in by September and a 50% chance of an earlier move by June. Meanwhile, the US Dollar is gaining strength, driven by rising US Treasury yields, with the US Dollar Index approaching 106.50.

Currently, the 2-year and 10-year US Treasury yields stand at 4.11% and 4.32%, respectively. Additional economic developments include US President Donald Trump’s investigation into tariffs on copper imports and the confirmation of tariffs on Canada and Mexico after a one-month delay.

The Japanese Yen’s value is influenced by various factors, including the Bank of Japan’s policies, bond yield differentials, and broader market risk sentiment. The gradual unwinding of the Bank of Japan’s ultra-loose policies has recently supported the Yen against its peers.

At the moment, the USD/JPY pair is hovering near 149.40, yet resistance could emerge as traders react to expected rate hikes from the Bank of Japan. Many are watching closely for Friday’s economic data, which includes reports on industrial production, retail activity, and inflation in Tokyo. These releases should provide further clues on whether policymakers will indeed act on interest rates sooner rather than later.

Market expectations suggest rates in Japan will rise to 0.75% before the year’s end, with September fully priced in. There’s also a one-in-two chance of a move as early as June. If these forecasts hold, it could shift investment flows, influencing the Yen’s performance. On the other hand, the US Dollar has been strengthening, mainly because of rising Treasury yields. As it stands, the US Dollar Index is moving towards 106.50, supported by higher returns on government bonds.

Right now, the 2-year Treasury yield is at 4.11%, while the 10-year yield is slightly higher at 4.32%. These levels matter because yield differentials often dictate currency movements. If US yields keep rising while Japan’s remain low, capital is more likely to favour dollar-denominated assets. However, should Japan’s central bank take a firmer stance, the Yen might resist further weakening.

Elsewhere, US President Donald Trump has announced an investigation into tariffs on copper imports, an issue that could play into broader inflationary concerns. Meanwhile, after delaying them for a month, tariffs on Canada and Mexico have now been confirmed. Developments such as these ripple through various asset classes, particularly commodities and equities, which, in turn, influence currency markets.

Sentiment around the Japanese Yen is tied to multiple factors, including central bank policy, interest rate spreads, and overall market risk appetite. Over recent months, the unwinding of Japan’s extremely loose monetary stance has given the Yen some backing. Whether that continues depends on how policymakers proceed and how global investors react to upcoming data points.