USD/JPY Hits New 40-Year High at 162.89 on Rising US Yields

USD/JPY has surged to a fresh 40-year high of 162.89, driven by persistent demand for the U.S. dollar and rising U.S. Treasury yields that continue to widen the interest rate differential between the Federal Reserve and the Bank of Japan. Buyers remain firmly in control of the near-term trend, with yesterday's pullback finding strong support at an upward-sloping trendline before rebounding into the swing area between 162.399 and 162.508. This zone has now been established as a key near-term support level. The relentless yen weakness underscores the divergence in monetary policy, with the BOJ maintaining its ultra-accommodative stance while U.S. yields push higher. Traders should be alert to potential verbal or direct intervention from Japanese authorities, which has historically occurred near these extreme levels. On the upside, there is limited historical resistance given the multi-decade highs, making psychological levels the primary reference points. A sustained break above 163.00 could accelerate the move, while a drop below 162.399 would signal near-term exhaustion.