USD/JPY Sell-Off Intensifies as GPIF Rebalancing Headlines Fuel Yen Demand

USD/JPY has come under significant selling pressure as headlines surrounding Japan's Government Pension Investment Fund (GPIF) triggered a wave of yen buying, accelerating the ongoing unwind in the pair. The move reflects growing market concerns that GPIF, the world's largest pension fund, may be shifting its portfolio allocation in favor of domestic Japanese assets, boosting demand for the yen. The sell-off has also weighed on the Nikkei 225, as a stronger yen dampens the outlook for Japanese exporters. Meanwhile, Japan's 10-year government bond yields have been in focus, with any shift in GPIF's bond allocation potentially impacting the broader fixed-income landscape. The Bank of Japan's policy stance remains a critical backdrop, as traders assess whether further normalization could amplify yen strength. On the technical front, the breakdown in USD/JPY suggests key support levels are being tested, and a sustained move lower could open the door to further downside. Traders should monitor GPIF-related developments closely, as institutional rebalancing flows can sustain directional moves in the yen over the near term.